Economists polled by Reuters had been expecting the May reading to come in at 2%, which is the European Central Bank's target.

German inflation eased further in May, bringing it closer to the European Central Bank's 2% target and bolstering the case for an interest rate cut next week, but economic turmoil and stubbornly high core inflation may overshadow hopes for a lasting recovery.

Eurozone inflation fell to 1.9% in May, below forecasts, boosting expectations of an ECB rate cut on Thursday. Core inflation also eased to 2.4%. The euro slipped and bond yields fell as markets priced in a 25bp rate cut to 2.