Euro zone inflation fell to its lowest level in nearly four years in May despite noticeably higher food costs as the Covid-19 pandemic reduced fuel demand and cut energy prices. 

The European Union's statistics office Eurostat said today that consumer prices in the euro zone declined by 0.1% in May from April and increased just 0.1% year-on-year after a rise of 0.3% last month. 

The headline inflation figure, the lowest annual level since June 2016, was in line with the average forecast of a Reuters poll of economists. 

It also brings price growth even further away from the European Central Bank's target of below, but close to 2% over the medium term. 

Energy prices plunged 12% year-on-year in May while unprocessed food prices were 6.5% higher. 

Without these two volatile components - a measure the ECB calls core inflation and watches closely in policy decisions - prices grew 1.1% in annual terms, as expected and the same increase as in April. 

An even narrower inflation measure excluding also alcohol and tobacco prices that many market economists look at, was also unchanged at 0.9% year-on-year in May. Economists had expected a slowdown to 0.8%.