Inflation rate in euro area fell to zero in May

According to The New York Times, the European Union statistics agency announced in a preliminary report that the annual inflation rate for the euro area was unchanged over the year to May, compared to a 0.6 % gain in April. The analysts said the drop was largely attributable to lower energy and food price inflation, while core inflation, which excludes those volatile prices, probably also fell noticeably. The annual rate of 0 % in May was the lowest level of inflation since Eurostat started producing comparable data in 1996. In Germany, Europe’s largest economy, consumer prices unexpectedly posted the first annual decline since at least 1996 this month. Growing unemployment and feeble wage increases are also likely to keep a lid on any significant rise in prices for some time. Figures from the European Central Bank released Friday showed a further decline in monetary and credit growth. Annual growth in M3, a broad measure of money supply, posted its sixth consecutive monthly decline in April, falling to 4.9 % from 5 % in March. Annual growth in bank lending to the private sector also continued its decline in April, falling to 2.4 % from 3.2 %, with annual growth in lending to the household sector and the non-financial corporate sector also slowing. Separate data released Friday showed that retail sales in Germany unexpectedly grew in April, raising hopes that consumer spending could help support the economy after a record slump in gross domestic product in the first quarter. Sales rose by 0.5 % from the previous month in seasonally adjusted terms, the Federal Statistics Office said. Year-on-year, sales fell by 0.8 %.