Eurozone deflation eases in May, Eurostat reveals

The consumer price index fell an annualised 0.1% in May, as expected by analysts, compared to a 0.2% drop in April.

The improvement was driven by increases in food, alcohol, tobacco and non-energy industrial goods. However, energy prices continued to fall, albeit at a slower pace.

Core inflation, which excludes volatile items such as food and energy, rose 0.8% year-on-year in May which was in line with forecasts and followed a 0.7% increase in April.

The data comes ahead of the European Central Bank's policy announcement on Thursday. The ECB, which is targeting inflation of just below 2%, is expected to keep policy unchanged. In March the ECB introduced a raft of stimulus measures to mend price stability including the expansion of the asset purchase programme and a cut to interest rates.

“Draghi has tried everything in his powers to stimulate the stubborn eurozone, and although inflation has ticked up slightly, he has yet to make any real inroads," said Dennis de Jong, managing director at UFX.com.

“With global uncertainty swirling, and a British vote on EU membership looming large, many observers appear to be sitting on their hands until the picture is clearer.”