ECB president deems Euro Zone inflation too high as rate drops to 6.1%.

In May, inflation in the Euro zone dropped more than analysts and observers had expected, reaching the lowest recorded figure since February 2022. Headline inflation fell from 7% in April to 6.1% in May, while core inflation, which excludes food and energy, fell from 5.6% to 5.3%. In addition, the Euro rose slightly against the British pound and the US dollar, and European stocks saw their values climb. Inflation in Italy and Spain is gradually reducing, and France and Germany are also seeing reductions below expected forecasts.

Lagarde: Euro Zone Inflation Is Still Too High

The President of the European Central Bank (ECB) Christine Lagarde believes that, despite falling below expected levels, inflation is still too high. She stated this at the Deutscher Sparkassentag 2023 conference, where she also explained that the ECB has been hiking rates at its fastest pace ever, with the goal of bringing inflation back down to its 2% medium-term target. She also stated that there will be more hikes until the apex bank achieves its target, while also monitoring the effect of all policies on the economy.

Inflation in Spain saw a 2-year low of 2.9% after the government subsidized gas bills. Germany’s inflation fell from 7.6% to 6.3%, while France also recorded a reduction from 6.9% to 6%. However, France also saw an 11% plunge in food purchases, reflecting the impact of inflation on purchasing power and general consumption.

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