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Eurozone inflation hits 3.2% in May, core rate rises

Created at 2 Jun · 9:07 AM22 sources↑ Market-relevant17 events
IN SHORT

Eurozone preliminary May CPI rose 3.2% year-over-year, matching expectations. Core CPI increased to 2.5% year-over-year, exceeding the estimate of 2.4%. Energy costs saw a 10.9% inflation rate, and services prices increased by 3.5%. This data strengthens the case for a rate hike by the European Central Bank.

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Key Numbers

3.2%Eurozone preliminary May CPI year-over-year
3.2%Estimated Eurozone CPI year-over-year
3.0%Eurozone April CPI year-over-year
2.5%Eurozone preliminary May Core CPI year-over-year
2.4%Estimated Eurozone Core CPI year-over-year
2.2%Eurozone April Core CPI year-over-year
0.1%Eurozone preliminary May CPI month-over-month
0.1%Estimated Eurozone CPI month-over-month
1.0%Eurozone April CPI month-over-month
10.9%Eurozone energy costs inflation rate in May
3.5%Eurozone services prices inflation rate in May
2.3%Eurozone preliminary May HICP ex Energy & Food year-over-year
2.1%Eurozone April HICP ex Energy & Food year-over-year
48.5Eurozone Composite PMI Output Index in May
47.7Eurozone services PMI in May
0.2%Projected quarterly GDP decline for Eurozone
3-1/2 yearsSharpest pace of input cost rise
38-monthHighest level for output price inflation
2%European Central Bank inflation target
2.25%Potential benchmark interest rate after June hike
5-1/2 yearsFastest pace of job losses

Who's Involved

Eurozone
Region reporting preliminary May consumer price and business activity data
European Central Bank (ECB)
Monetary policy decision-maker influenced by inflation and growth data
Eurostat
Data provider for Eurozone inflation figures
S&P Global
Provider of the Eurozone Composite PMI Output Index
Chris Williamson
Chief business economist at S&P Global Market Intelligence
Isabel Schnabel
ECB Executive Board member
Gediminas Simkus
ECB Governing Council member
Olli Rehn
ECB Governing Council member
Eurozone inflation hits 3.2% in May, core rate rises

↳ Why This Matters

The combination of rising inflation and contracting economic activity puts the European Central Bank in a difficult position, potentially forcing it to raise interest rates to combat price pressures despite weakening growth, which could further dampen economic prospects.

Key facts

  • Eurozone preliminary May CPI rose 3.2% year-over-year, matching expectations.
  • Core CPI increased to 2.5% year-over-year, exceeding the estimate of 2.4%.
  • Monthly CPI increased by 0.1%, matching the estimate.
  • Energy costs saw a 10.9% inflation rate.
  • Services prices increased by 3.5%.

Eurozone inflation reached 3.2% year-over-year in May, matching expectations and up from 3.0% in April. The core inflation rate, excluding food and energy, accelerated to 2.5% from 2.2%, surpassing the 2.4% forecast. Services inflation rose to 3.5%, the highest since November, while energy costs increased by 10.9%. Concurrently, the Eurozone Composite PMI Output Index fell to 48.5 in May, indicating the fastest contraction in private sector activity in 18 months. This decline, driven by waning demand and a sharp increase in input costs to a 3-1/2 year high, suggests the economy may slip into contraction in the second quarter. Business confidence remains weak, and firms reported accelerating job losses. The persistent inflation, coupled with slowing economic growth, presents a challenging dilemma for the European Central Bank, which is widely expected to raise interest rates by 25 basis points on June 11.

Frequently asked questions

The preliminary inflation rate for the Eurozone in May was 3.2% year-over-year.

Yes, the preliminary figure of 3.2% met the estimated increase of 3.2%.

Core CPI (Y/Y) rose to 2.5%, exceeding the estimate of 2.4% and the previous figure of 2.2%.

This data strengthens the case for a June rate hike by the European Central Bank, but the slowing economy presents a policy dilemma.

What Happens Next

01ECB likely to raise rates by 25 basis points on June 11.
02One or two more rate hikes are expected in the autumn.
03Eurozone economy may contract by 0.2% in Q2 if current trends persist.

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Cadence
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How It Developed

3 Jun · 8:10 AM
Eurozone business activity contracted in May, hitting an 18-month low due to falling demand and surging costs.
Reuters via PiQSuite
2 Jun · 4:40 PM
European shares rose, boosted by STMicroelectronics' forecast, as Eurozone inflation hit 3.2%, reinforcing ECB rate hike expectations.
PiQSuite
2 Jun · 12:02 PM
Eurozone inflation rose to 8.5% in January, up from 8.0% in December, increasing expectations for an ECB rate hike.
LiveSquawk Market Reports via PiQSuite
2 Jun · 9:58 AM
Article suggests May Eurozone inflation data, particularly services, is worse than it appears, increasing rate hike likelihood.
@atalaveraEcon via PiQSuite
2 Jun · 9:57 AM
New data shows Eurozone HICP ex Energy & Food rose to 2.3% in May, up from 2.1% previously.
@PiQNewswire via PiQSuite
2 Jun · 9:38 AM
🇪🇺 Euro area inflation was 0.1% MoM and 3.2% YoY (vs 3.2% YoY expected) in May, accelerating from 3.0% YoY in April, the highest since September 2023. While energy fell -1.1% MoM, annual growth remained high at 10.9% YoY in May (up from 10.8% YoY in April). Core inflation also https://t.co/BiULcrIFKj
@MTSInsights via PiQSuite
2 Jun · 9:34 AM
Article reports October Eurozone consumer prices rose due to energy shock, reinforcing ECB rate hike expectations.
Investing.com via PiQSuite
2 Jun · 9:32 AM
New article specifies core inflation rose to nearly 2.6% in May, exceeding prior estimates and impacting Q2 tracking.
@_SimonHarvey via PiQSuite
2 Jun · 9:30 AM
Eurozone May CPI hit 3.2%, highest in nearly three years due to Middle East energy shock.
@FT via PiQSuite
2 Jun · 9:19 AM
Eurozone August annual inflation hit 9.1%, strengthening the argument for another ECB rate hike.
Investing.com via PiQSuite
2 Jun · 9:10 AM
Eurozone inflation rose to 3.2% in May, driven by energy and services costs, reinforcing the case for an ECB rate hike.
PiQSuite
2 Jun · 9:09 AM
Eurozone inflation hit 3.2% in May, marking a fourth consecutive rise and the highest level since September 2023.
WSJ | Economy via PiQSuite
2 Jun · 9:08 AM
Eurozone inflation exceeded 3% for the first time since 2023, reinforcing expectations for an ECB rate hike.
@business via PiQSuite
2 Jun · 9:07 AM
Eurozone inflation rises to 3.2% in May as ECB prepares to raise rates https://t.co/mF0rwL4Duf
@FT via PiQSuite
2 Jun · 9:03 AM
The article confirms the Eurozone's preliminary May CPI at +3.2% year-over-year, matching expectations.
@investingLive_ via PiQSuite
2 Jun · 9:00 AM
Eurozone May CPI rose to 3.2% matching estimates, while core CPI increased to 2.5%, exceeding forecasts.
@LiveSquawk via PiQSuite
2 Jun · 9:00 AM
Euro Area preliminary May consumer prices rose 3.2% year-over-year, matching the estimated increase.
@FirstSquawk via PiQSuite

Sources

T1
EURO AREA PRELIM MAY CONSUMER PRICES RISE 3.2% Y/Y; EST. +3.2%@FirstSquawk via PiQSuite
T1
Eurozone May preliminary CPI +3.2% vs +3.2% y/y expected https://t.co/AlAHoDm9Y1@investingLive_ via PiQSuite
T1
Eurozone CPI (Y/Y) May P: 3.2% (est 3.2%; prev 3.0%) - CPI Core (Y/Y): 2.5% (est 2.4%; prev 2.2%) - CPI (M/M): 0.1% (est 0.1; prev 1.0%)@LiveSquawk via PiQSuite
T1
LS Preview | Eurozone Inflation Poised For Next Rise As ECB Preps Rate Hike https://t.co/zNsmHJUGjm - Headline measure forecast at 3.3% y/y (prev 3.0%) - Core rate projected at 2.4% y/y (prev 2.2%) - ECB likely to raise rates next week - Data due Tuesday at 10:00 GMT / 11:00 CEST@LiveSquawk via PiQSuite
T1
Euro zone inflation rises again, reinforcing case for ECB hikem.piqsuite.com
T1
Eurozone Inflation Climbs Further as ECB Weighs Rate Hikem.piqsuite.com
T1
Euro-area inflation topped 3% for the first time since 2023, cementing expectations for an interest-rate hike when the ECB meets next week https://t.co/2qiC6mznsq@business via PiQSuite
T1
Eurozone inflation rises to 3.2% in May as ECB prepares to raise rates https://t.co/mF0rwL4Duf@FT via PiQSuite
T1
Breaking news: Eurozone inflation rose to 3.2% in May as the Middle East energy shock pushed price growth to highest level in nearly three years https://t.co/hwRsW7xkIO https://t.co/isVYYOHzAl@FT via PiQSuite
T1
EZ May inflation showed Core - which is a better reflection of the inflation environment given fiscal offsets for energy in Ger, Spain, Italy etc - rising from 2.2% to nearly 2.6% y/y. This brings the Q2 tracking up to 2.4%, i.e. above the ECB's Mar "baseline" and "adverse"@_SimonHarvey via PiQSuite
T1
Euro zone inflation rises again, reinforcing case for ECB hikem.piqsuite.com
T1
🇪🇺 Euro area inflation was 0.1% MoM and 3.2% YoY (vs 3.2% YoY expected) in May, accelerating from 3.0% YoY in April, the highest since September 2023. While energy fell -1.1% MoM, annual growth remained high at 10.9% YoY in May (up from 10.8% YoY in April). Core inflation also https://t.co/BiULcrIFKj@MTSInsights via PiQSuite
T1
Eurozone consumer prices increase amid energy shock, bolstering ECB rate hike betsm.piqsuite.com
T1
💡 CPI (May) $EUR Actual: 3.2% Forecast: 3.2% Previous: 3%@PiQNewswire via PiQSuite
T1
Bad Eurozone inflation report for May, which seals the deal for a rate hike later this month. Some base effects making services inflation worse than it probably is, but when the ECB looks at the momentum in inflation since March, they will not like what they see. https://t.co/RwPIo0kP4y@atalaveraEcon via PiQSuite
T1
💡 HICP ex Energy & Food (May) $EUR Actual: 2.3% Previous: 2.1%@PiQNewswire via PiQSuite
T1
Euro zone inflation jump reinforces case for June rate hikem.piqsuite.com
T1
Eurozone Inflation Continues Higher Ahead Of Likely ECB Rate Increasem.piqsuite.com
T1
Euro Area Inflation Tops 3.0% For First Time Since 2023, Cementing ECB Rate Hikem.piqsuite.com
T1
Euro zone business wilts in May as war-driven inflation surges, pointing to Q2 GDP contractionm.piqsuite.com
T1
Euro zone inflation rises again, reinforcing case for ECB hikem.piqsuite.com
T1
European shares rise as STMicroelectronics lifts tech; inflation backs ECB hike betsm.piqsuite.com

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