The euro zone remained in deflation for the second month in a row in May, according to a first estimate from the EU's statistics agency.

However, euro zone prices fell by less than in April mainly due to a slowdown in the decline of energy prices.

Eurostat said inflation in the euro zone increased to -0.1% in May year-on-year from -0.2% in April, in line with market expectations. 

Core inflation, which according to the European Central Bank's definition excludes the most volatile components of unprocessed food and energy, also slightly rose to 0.8% from 0.7% in April. 

That figure was also in line with the average forecast of economists polled by Reuters. 

Energy prices continued to drop but at a reduced rate. In May they were down 8.1% on a yearly basis, from a 8.7% drop recorded in April.

Prices in the services sector, the largest in the euro zone economy, rose 1% year-on-year, the highest increase among the main components of the inflation index. They were up 0.9% in April. 

Eurostat's flash estimate does not include a monthly calculation.