Eurozone inflation seen at zero in May

Stoking fears that prices may continue to fall in the euro area, the region's official statistical agency has pegged inflation at zero per cent for the month of May.

Eurozone — the 16 countries which share the common currency euro — saw an inflation of 0.6 per cent in April.

Eurostat, the statistical office of the European communities, today said inflation in the region is expected to be zero per cent this month.

"Euro area annual inflation is expected to be zero per cent in May 2009... It was 0.6 per cent in April," Eurostat said in a statement.

Rattled by the financial turmoil, the economies in the region are reeling under recession — broadly defined as two straight quarters of negative growth.

The GDP in the 16-nation Euro zone contracted by 2.5 per cent in the first three months of 2009, much higher than expectations. The economies have shrunk for the fourth straight quarters.

Eurostat estimates suggested that Eurozone economy would shrink about 2 per cent in the first quarter. Moreover, the GDP in the 27-nation European Union declined by 2.5 per cent in the same period.