Euro Zone Annual Inflation Falls to Zero in May

Prices stopped growing year-on-year in the euro zone in May for the first time, data showed on Friday, and economists expect them to start falling in June.

Consumer prices were unchanged year-on-year in the 16-country euro area this month after increases of 0.6 percent in March and April, the European Union's statistics office said.

Economists in a Reuters poll published on May 22 had expected prices this month to rise by 0.2 percent.

The Eurostat estimate gives no monthly figure or a more detailed breakdown, but economists expected inflation to have slowed because oil was much less expensive than a year ago.

Prices in May stopped growing in Germany, the euro zone's biggest economy, turned negative in Belgium for the first time since 1960 and fell for the second month in a row in Spain.

Armando Franca / AP Flags of member states of the European Union.

"Inflation will probably turn negative in June," Unicredit bank said in a research note before the data release.

The European Central Bank wants inflation to be just below 2 percent over the medium term to avoid the risk of deflation, which is a prolonged and widespread decline in prices coupled with consumers' expectations of further falls.

The bank has said consumer prices are likely to fall for a few months in mid-year because of comparison effects with record high oil and food costs the year before, but that price growth will resume later. It has said it does not expect deflation.

The ECB has lowered its main refinancing rate to a record low of 1 percent to boost credit and consumption, and announced it would buy 60 billion euros ($84 billion) of corporate debt.

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