European data continued to send mixed messages to markets on Wednesday, with inflation dipping lower while the unemployment rate hit an eight-year low.
The data underlined concerns outlined on Monday by Mario Draghi, European Central Bank president, that weak underlying inflation will require a prolonged period of accommodative monetary policy.
Eurozone CPI falls
Eurozone consumer price inflation fell to an annual 1.4% per cent in May from 1.9% in April, according to preliminary estimates. This was weaker than the 1.5% forecast.
Earlier in the week, ECB chief Draghi told the European parliament in Brussels that "for domestic price pressures to strengthen we still need very accommodative financing conditions".
Unemployment at post-crisis low
Consumer confidence has remained fairly subdued in the eurozone, despite falling unemployment.
The eurozone unemployment rate fell to 9.3% in April from 9.4% in March, data on Wednesday showed. This was lowest rate in the post-financial crisis era.
Low wage growth has kept consumer spending in check, and is why consumer price inflation is now falling further behind the ECB's 2% target rate.
ECB to remain on hold
Following the data, Cathal Kennedy at Royal Bank of Canada said: "The ECB [is likely] to continue to stress that underlying inflation pressure in the euro area remains weak, despite strengthening growth, when it meets next week."