Preliminary data published by Eurostat showed that the eurozone annual inflation accelerated in May for the first time in five months, and exceeded economists' forecasts. Meanwhile, core inflation also accelerated in May - for the first time in 10 months - after reaching its lowest level since February 2022 in April. Although it is highly unlikely that today's data will prevent the ECB from easing monetary policy at next week's meeting, a stronger price increase may cement the case for a pause in July and a slower pace of interest rate reductions in the coming months.
According to the report, the consumer price index rose by 2.6% per year after increasing by 2.4% per annum in April. Economists expected an increase of 2.5%. Meanwhile, on a monthly basis, the consumer price index rose by 0.2%, slowing compared to April (+0.6%).
Eurostat reported that the core consumer price index - excluding energy, food, alcohol & tobacco - rose by 2.9% per year after an increase of 2.7% per year in April. Economists had expected an increase of 2.8% per annum.
The data showed that the annual growth of the overall consumer price index was due to an increase in the cost of services (+4.1% vs. +3.7% in April), food, alcohol & tobacco (+2.6% vs. +2.8%), non-energy industrial goods (+0.8% vs. +0.9%) and energy (+0.3% vs. -0.6%).