- Chris Williamson, Markit's chief economist
For the first time this year, consumer prices across the 19-country currency bloc edged higher, easing fears that the Euro zone is set for a prolonged Japan-style era of deflation. According to a report from Eurostat, consumer prices across the Euro bloc climbed 0.3% last month from the year before, with energy prices becoming less of a drag. More surprisingly, core inflation, which excludes volatile components such as energy, food, alcohol and tobacco soared to 0.9%, the fastest rate since August 2014. In January, when the European Central Bank announced its quantitative easing programme, Euro zone consumer inflation stood at minus 0.6%. Now, less than three months since bond purchases have begun, inflation has rebounded quickly to 0.3%. Nevertheless, inflation remains far below the ECB's target of below, but close to 2%.
Meanwhile, the number of unemployed in Germany dropped by 6,000 in May, while the unemployment rate remained at the lowest level in 25 years for the third consecutive month. The unemployment rate remained at 6.4% in seasonally adjusted terms, a record low where the gauge dropped to in March. At the same time, the number of unemployed in Spain fell by 118,000 in May, measured on a monthly basis, after a considerable decrease of almost 119,000 in the preceding month. Unhealthy high unemployment in Spain remains a hot political issue ahead of parliamentary elections at the end of this year.
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