Inflation within the eurozone slid final month to the bottom degree in additional than a yr, as an easing of value rises after final yr’s run-up in vitality payments gained momentum. But the price of food and providers climbed at an uncomfortable tempo, elevating the percentages that the European Central Bank will proceed to raise rates of interest to curb prices.

Consumer costs in nations that use the euro rose at an annual fee of 6.1 p.c in May, down from 7.0 percent in April and properly under double-digit will increase in autumn, Europe’s statistical company reported Thursday. Excluding unstable meals and vitality prices, so-called core inflation rose 5.3 p.c, down from 5.6 p.c the month earlier than.

Yet whereas the yearlong surge in inflation has peaked, hundreds of thousands of households in Europe are persevering with to confront a cost-of-living crisis, at the same time as employers increase wages to assist offset the ache, a problem that is still a prime concern for E.C.B. officers.

“I could not say that the victory is there so far,” the financial institution’s vice chairman, Luis de Guindos, mentioned in Frankfurt earlier this week.

How a lot larger the European Central Bank will increase rates of interest to deal inflation stays to be seen. Last month Christine Lagarde, the financial institution’s president, mentioned “we have more ground to cover” with the intention to carry inflation right down to the E.C.B.’s 2 p.c goal, and policymakers have signaled they may raise charges a minimum of as soon as extra once they meet later this month, in all probability by a quarter-point.

“From there on, things get more uncertain,” analysts at ING Bank wrote in a notice on Thursday.

But with core inflation nonetheless excessive, the central financial institution may increase charges twice in coming months, to three.75 p.c, in response to a forecast by Nomura. “Persistently high core inflation will remain a concern for the E.C.B.,” analysts wrote in a notice to shoppers earlier this week.

The moderation in value good points final month mirrored efforts by governments in Europe’s largest economies to decrease skyrocketing vitality prices over the winter by way of concerted efforts to make up for a decline in Russian fuel provides. Many continued a coverage of protecting households from hovering vitality payments. They additionally put stress on meals producers to cap surging costs on grocery retailer cabinets.

Germany’s annual inflation fee fell to six.3 p.c in May, from 7.6 p.c in April; in France, the speed fell to six p.c, from 6.9 p.c, properly under economists’ forecasts. Spain’s inflation fell to 2.9 p.c, a two-year low as the federal government there backed fuel payments.

Despite authorities applications to guard shoppers from runaway costs, prices for meals, alcohol and tobacco stay excessive, growing at an annual fee of 12.5 p.c in May. Still, that’s down from 15.5 p.c in March.

In France, the eurozone’s second largest financial system, meals purchases slumped 11 p.c under the extent in the course of the coronavirus pandemic.

The slowdown “shows the significant impact of the inflationary context and the fall in purchasing power, which has led households to significantly alter their consumption habits,” Charlotte de Montpellier, senior economist at ING Bank, mentioned in a notice to shoppers.

In Germany, which started the yr in a recession, stubbornly excessive inflation has brought on shoppers to reduce consumption, pushing spending down 1.2 p.c within the first three months of this yr.

“The reluctance of households to buy was apparent in a variety of areas,” the German statistics workplace mentioned in a report final week. “Households spent less on food and beverages, clothing and footwear, and on furnishings.” They additionally bought fewer electrical vehicles, as authorities incentives have been diminished.

And few consider that inflation is certain to proceed moderating within the months forward. France is amongst nations which are pulling again on beneficiant vitality subsidies as the federal government seeks to rein in its funds, heralding a rise in prices for shoppers and companies.

The inflationary pressures have more and more filtered by way of the eurozone’s financial system, particularly for providers starting from lodge managers and waiters at eating places to truck drivers, whose prices have been zooming up as employers increase wages amid employee calls for to maintain up with rising month-to-month bills. Services inflation rose at an annual 5 p.c tempo in May, a steep improve from the earlier yr.

The labor market within the euro space stays tight, as unemployment has fallen to the bottom on document, reaching a seasonally-adjusted fee of 6.5 p.c in April, Eurostat reported. Hourly labor prices within the eurozone rose at a document tempo of 5.7 p.c within the fourth quarter of final yr, in contrast with a yr earlier.