May 31, 2023 (MLN): Easing inflation in key eurozone economies such as France and Spain is "positive" news, a senior European Central Bank official said Wednesday, but stressed it was too soon to declare victory, as reported by APP.

Consumer price growth slowed to 5.1% YoY in France in May, down from 5.9% a month earlier, preliminary figures showed Wednesday.

Spanish inflation meanwhile declined to 3.2% in May mainly thanks to lower fuel costs, after hitting 4.1% in April, according to figures released on Tuesday.

"The data that we have received yesterday and today is positive, it's a decline in headline inflation," ECB vice-president Luis de Guindos told reporters. "But I would not say that the victory is there," he said at the launch of the ECB's twice-yearly report on financial stability.

He further added "we are on a correct trajectory and we have to look very carefully at the evolution of core inflation" which excludes volatile food and energy prices.

Other data on Wednesday showed price growth in Italy slowing to 7.6% from 8.2% in April, still well above the ECB's two-percent target. Inflation figures for Germany, Europe's biggest economy, are due to be released at 1200 GMT.

Mortgage demand falling -The ECB has hiked interest rates by an unprecedented 3.75% since last July in an attempt to bring down rapidly rising consumer prices.

In its Financial Stability Review, published on Wednesday, the ECB warned that the higher rates were weighing on consumers and companies.

Although economic conditions have "improved slightly" and energy prices have fallen, higher borrowing costs and stricter credit conditions "are testing the resilience" of euro area firms and households, the report said.

Demand for new loans, especially mortgages, declined sharply in the first quarter of 2023, it found. The current price "correction" in real estate markets "could turn disorderly if higher mortgage rates increasingly reduced demand," the report warned.

Financial markets and investment funds were also "vulnerable to disorderly adjustments," it said, "particularly in the event of renewed recession fears."

"The outlook for euro area financial stability remains fragile," the report said.

The ECB is expected to announce another rate hike in June.

Copyright Mettis Link News

Posted on: 2023-05-31T17:22:54+05:00