Spanish inflation has slowed by more than anticipated, supporting the European Central Bank officials who say that the continent's historic price rise is fading and interest-rate increases can soon end.
May s reading moderated to 2.9% - the lowest since July 2021 as fuel costs fell and the growth in food prices eased. The result follows the uptick to 3.8% in April and is well below the 3.3% median estimate in a Bloomberg survey of economists.
There was good news on inflation, as the gauge that ignores energy costs and some food items fell for a third straight month, though it remained elevated at 6.1%.
Euro-area government bonds edged higher on Monday, extending Monday's rally. The yield on the Spanish government's 10-year debt fell 3 basis points to 3.47%, in line with Germany.
Tuesday's data are the first in a raft of consumer-price releases from the region. While Spain has boasted of far the slowest inflation among the euro zone's largest economies, it is demonstrating the same trend: a faster retreat in headline price gains than in the core measure.
The ECB's analysts expect at least two more quarter-point rate increases to come, with ECB officials primarily watching the pair as a guide to when to finalize their unprecedented monetary tightening campaign. Some policymakers believe hikes could stretch into September, potentially pushing the deposit rate to 4% from 3.25% now.
We think we still have some way to go in tightening monetary policy, although we also think that we are closer to the end, said Pablo Hernandez de Cos, the governor of Spain's central bank.
Spain's Prime Minister Pedro Sanchez is relieved by the slowdown in inflation in May. After his left-wing coalition faced heavy losses in Sunday's local elections, he unexpectedly called a snap election for July 23.
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