Pressure on Bank boss Bailey after eurozone inflation fall

Eurozone inflation fell more sharply than expected in May, according to figures that highlight the Bank of England’s failure to master spiralling prices in Britain.

Inflation across the 20-country bloc fell to 6.1 per cent, its lowest since February last year – and down from 7 per cent in April.

In Britain, inflation has been tougher to control, prompting sharp criticism of the Bank of England and Governor Andrew Bailey.

Former US treasury secretary Larry Summers said yesterday that UK economic policy had been ‘substantially flawed for some years’ – blaming Brexit but also the Bank’s delay in raising interest rates and curtailing its quantitative easing.

In a broadside at the Bank during a BBC interview, Summers pointed to ‘very ill-judged monetary policies that were substantially too expansionary for too long’.

UK inflation has only just ended a seven-month spell at more than 10 per cent, falling to 8.7 per cent in April.

Britain and Europe have been affected by surging energy prices as a result of Russia’s invasion of Ukraine – and both are seeing that pressure ease.

Consumers on both sides of the Channel are feeling the pinch from eye-watering rises in the cost of food. But while UK food inflation is 19 per cent, in the eurozone it dropped to 12.5 per cent in May, down from 13.5 per cent.

And the European Central Bank (ECB) is managing to bring down ‘core’ inflation – stripping out food and energy prices – which has gone down from 5.6 per cent to 5.3 per cent.

In the UK, April figures showed that core inflation climbed to 6.8 per cent, its highest level since 1992.

Like the Bank of England, the ECB has been hiking interest rates to battle inflation.

At 3.25 per cent, its benchmark rate is lower than the Bank’s at 4.5 per cent. ECB president Christine Lagarde said there was ‘still ground to cover’ to lift them to a high enough level.