Paris: Inflation in the eurozone slid last month to the lowest level in more than a year, as an easing of price rises after last year's run-up in energy bills gained momentum, the New York Times reported.
However, the US daily said the price of food and services climbed at an uncomfortable pace, raising the odds that the European Central Bank (ECB) will continue to lift interest rates to curb costs. Consumer prices in countries that use the euro rose at an annual rate of 6.1 per cent in May, down from 7 per cent in April and well below double-digit increases in autumn, Europe's statistical agency reported Thursday. Excluding volatile food and energy costs, so-called core inflation rose 5.3 per cent, down from 5.6 per cent the month before, NYT reported.
While the yearlong surge in inflation has peaked, NYT said millions of households in Europe are continuing to confront a cost-of-living crisis, even as employers raise wages to help offset the pain, an issue that remains a top concern for ECB officials.
"I could not say that the victory is there so far," the bank's vice president, Luis de Guindos, said in Frankfurt this week.
NYT said how much higher the European Central Bank will raise interest rates to deal with inflation remains to be seen.
Last month, Christine Lagarde, the bank's president, said that "we have more ground to cover" to bring inflation down to its 2 per cent target, and policymakers have signalled that they will lift rates at least once more when they meet this month, probably by a quarter point.
"From there on, things get more uncertain," analysts at ING Bank wrote in a note on Thursday.
But with core inflation still high, the central bank could raise rates twice in coming months, to 3.75 per cent, according to a forecast by Nomura. "Persistently high core inflation will remain a concern for the ECB," analysts wrote in a note to clients this week.
The moderation in price gains last month reflected efforts by governments in Europe's largest economies to lower skyrocketing energy costs over the winter through concerted efforts to make up for a decline in Russian gas supplies, NYT reported, adding many continued a policy of shielding households from soaring energy bills.
They also put pressure on food producers to cap surging prices on grocery store shelves.
The New York Times reported Germany's annual inflation rate fell to 6.3 per cent in May, from 7.6 per cent in April; in France, the rate fell to 6 per cent, well below economists' forecasts, from 6.9 per cent. Spain's inflation fell to 2.9 per cent, a two-year low as the government there subsidised gas bills.
Despite government programmes to protect consumers from runaway prices, costs for food, alcohol and tobacco remain high, increasing at an annual rate of 12.5 per cent in May, the daily newspaper said. Still, that was down from 15.5 per cent in March, it added.