MNI BRIEF: Euro Area Inflation Falls Below ECB Target In May

Eurozone May headline inflation fell to the lowest level since September 2024, dipping below the ECB's 2% target level, data released by Eurostat showed on Tuesday.

Headline inflation slowed to 1.9% year-on-year, down from 2.2% in  April. Core inflation also slowed sharply, coming in at 2.3% y/y, down from 2.7% previously. The closely-watched service sector inflation gauge also slowed to 3.2% y/y, down from 4.0%.

The Governing Council is expected to cut rates a further 25 bp to 2.0% on Thursday. The ECB's latest projections are also expected to see a downward revision for inflation in 2026 and now possibly in 2025 also. (See MNI SOURCES: ECB Set To Lower 2026 Inflation Projection )