On Tuesday 18 June, at the ECB's annual forum in Sintra, Portugal, the President of the European Central Bank (ECB), Mario Draghi, promised that, as the financial and debt crises in the euro area had shown, “If the crisis has shown anything, it is that we will use all the flexibility within our mandate to fulfil our mandate – and we will do so again to answer any challenges to price stability in the future”.
This statement, which recalls the wording ‘whatever it takes’ used at the height of the sovereign debt crisis, could reinforce the hypothesis of new monetary support measures by the ECB, while inflation has no longer reached its target of a close level, but less than 2% in the medium term, since 2013.
At the beginning of June, the Monetary Institute decided that its main key policy rates would remain unchanged at current low levels until mid-2020 (see EUROPE 12270/17).
On Tuesday, the Statistical Office of the European Union (Eurostat) reported a sharp drop – 0.5 percentage points – in annual inflation between April and May, which stood at 1.2% last month in the euro area.
The decrease is even more significant compared to May 2018, when the rate reached 2.0%. In the European Union, annual inflation was 1.6% last month, down 0.3 percentage points from the previous month (see EUROPE 12257/8) and 0.4 percentage points from May 2018.
However, these general rates hide significant disparities between Member States. Annual inflation in May this year was 0.2% in Cyprus, 0.3% in Portugal and 0.6% in Greece, while it reached 3.5% in Latvia, 4.0% in Hungary and 4.4% in Romania.
Under the components of inflation, it should be noted that services contributed the most to price increases in the euro area between December 2018 and 2019 (by 0.47 percentage points), ahead of energy (+0.38 percentage points), food, alcohol and tobacco (+0.29 percentage points) and non-energy industrial goods (+0.08 percentage points). (Original version in French by Lucas Tripoteau with Mathieu Bion)