The euro-zone inflation rate eased last month, signalling that it may be heading back towards the ECB's limit, but economic sentiment in the bloc suffered a slight setback, data showed yesterday.

Inflation dropped to an annual rate of 2.4 per cent from a two-year high in May of 2.5 per cent, a result expected by economists after the retreat in oil prices from 21-year highs had helped German inflation to ease.

The drop in inflation, reported by the European Union's statistics office Eurostat, should provide welcome relief to the ECB, which meets today with economists expecting the bank to wait with any rate hikes until the economic recovery is on a solid path.

The ECB said the May rise in inflation was an aberration and it expects consumer prices to retreat next year below its 2.0 per cent ceiling as long as wage demands remain muted and there are no more shocks from oil or food prices.

A European Commission survey provided fresh evidence of the sluggish nature of the euro-zone economic recovery, which continues to rely on exports, making it critical that the US Federal Reserve can keep the US economy healthy.

The indicator for euro-zone economic sentiment slipped to 99.8 from a revised 100.1 due to deteriorating confidence in services and retail trade.

But the Commission also released a separate euro-zone business climate indicator, which rose to its highest in more than three years due to a more positive assessment of industry managers about exports and order books.