In May, inflation showed a noticeable slowdown, slipping by 0.9 percentage points to 3.2 percent, a level that marks a 15‑month low and places the month below April’s 4.1 percent by a wide margin. Early figures from the National Institute of Statistics (INE) also suggest that the core inflation rate, which strips out the more volatile components of unprocessed food and energy, could be adjusted to 6.1 percent down from 6.6 percent in April. While these numbers provide a compelling snapshot, the INE cautions that the final, official data will be published later, with full confirmation set for the next release. On a month-to-month basis, overall inflation fell by 0.1 percentage point from April to May, underscoring a softer price trajectory across the economy during the latest period.
The INE notes that the principal driver behind the May slowdown is the price path for fuels, which had been higher a year earlier. The energy component played a significant role in pulling the annual rate down, while other categories contributed more modest changes. Food and non-alcoholic beverages also cooled compared with the same month a year ago, rising 1.2 percent on a year-on-year basis, a softer pace than in prior months and a signal of easing pressures in consumer basics for households.
In its leading indicator note, INE has yet to publish a detailed breakdown of price movements by component. Investors and analysts will be awaiting the June 13 release to see how individual categories contributed to the observed change. The current data imply that food prices remained higher in May relative to April, but the year-over-year increase was not as pronounced as in the previous year. For context, the annual change for food stood at 12.9 percent in April, highlighting both the scale of the prior surge and the subsequent deceleration as supply conditions stabilized and demand shifted.
The INE also released an advance estimate of the annual rate for the Harmonized Index of Consumer Prices (HICP), the euro area’s harmonized inflation measure, which stood at 2.9 percent. This rate is nine-tenths of a percentage point lower than the prior month, reinforcing the trend of cooling inflation across the eurozone. A key message from government officials is the relative position, with the May data supporting the view that the country remains among the EU leaders in price stability. This divergence underscores the effectiveness of the policy measures implemented so far. Looking ahead, policymakers will weigh whether to extend certain provisions beyond their current expiry at the end of June, including the value-added tax reduction applied to a broad range of fresh and processed foods that began at the start of the year.
Inflation peaked at 10.8 percent in July of the previous year, with the high point of 2023 coming in February at 6 percent. The May figures illustrate how inflation has cooled from that peak and how the economy is gradually returning to more moderate price dynamics, influenced by energy market trends, exchange rate movements, and the effectiveness of fiscal measures put in place to support households and businesses during periods of higher cost pressures.