Eurozone inflation falls sharply amid slowdown fears

BRUSSELS, Belgium – Eurozone inflation dropped sharply to 1.2% in May, data showed on Tuesday, June 4, raising the specter of a global economic slowdown.

Analysts surveyed by data company Factset had predicted a more modest drop in inflation to 1.4%, down from the 1.7% logged in April.

The latest data puts consumer prices in the 19-nation single currency bloc even further from the European Central Bank's (ECB) inflation goal of just below 2.0%.

Eurozone unemployment meanwhile dropped to 7.6% in April, down from 7.7% in March.

This marked the lowest rate recorded in the 19-nation single currency bloc since August 2008.

The drop in consumer prices landed a day after data showed that factory output in the eurozone fell close to a six-year low in May.

This has compounded fears that international trade turbulence caused by the protectionist offensive by US President Donald Trump against China and other partners is destabilizing the world economy.

Economists say investor confidence is shaken by US-led trade war, putting pressure on the ECB governors to do more to boost the economy when they meet on Thursday, June 6.

The ECB's firepower is limited however, after years of very low rates and other unprecedented steps to boost lending and growth in Europe. –