Inflation falls across major European economies

People shop at a supermarket in Frankfurt, Germany. Photo: THX/TTXVN

Inflation fell to 7.2% in April 2023, its lowest since August 2022, and economists had expected it to fall to 6.5% in May. The German figures are a key indicator of inflation across the eurozone, which will be released by Eurostat on June 1.

Price movements in individual countries in the eurozone are crucial to the future interest rate policy of the European Central Bank (ECB). In early May, the ECB raised the eurozone's base interest rate to 3.75% for the seventh consecutive time. Experts expect the ECB to continue to raise interest rates further in the coming time.

Meanwhile, the unemployment rate in Germany also fell in May 2023, although at a slower pace than usual in the spring. According to the Federal Labor Agency (BA), despite the weakening economy, the labor market remains generally stable, with job growth continuing but somewhat losing momentum. The figures show few signs of a significant spring revival in the labor market. The number of unemployed in Germany fell to 2.544 million in May 2023, down 42,000 from April but 284,000 more than in the same month a year earlier. The rate fell 0.2 percentage points to 5.5% in May 2023. The unemployment rate typically falls in the spring as companies look for more workers after the winter. However, the spring labor market recovery depends on economic conditions and weather conditions, so it can vary from year to year.

Germany's economy has been in recession since the start of the year as consumers spend less amid high inflation. Many economists expect Europe's largest economy to shrink throughout 2023.

Preliminary figures showed that consumer price growth in France slowed to 5.1% in May 2023, down from 5.9% in the previous month. Meanwhile, figures released a day earlier in Spain showed that the country's inflation fell to 3.2% in May from 4.1% in April thanks to lower fuel costs.

Italian data released on May 31 showed that the country’s price growth in May 2023 also slowed from 8.2% in April to 7.6%. However, this figure is still higher than the 2% target set.

According to a VNA correspondent in Italy, credit rating agency Moody's Investors Service (Moody's) has revised its forecast for Italy's GDP growth in 2023 to 0.8%, higher than the 0.3% growth forecast it previously gave in February 2023. In contrast, Moody's has cut its forecast for Italy's GDP growth in 2024 from 0.6% to 0.4%.

According to the assessment of the Vice President of the European Central Bank (ECB) Luis de Guindos, this is positive information, but it is too early to declare the region victorious over inflation. Speaking at the announcement of the ECB's periodic report on financial stability, he said that Europe is on the right track and countries in the region need to carefully consider the development of core inflation, excluding food and energy prices.

According to VNA

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