Eurozone inflation rises to 3.2%

Eurostat said on June 2 that euro area annual inflation rose to 3.2% in May from 3.0% in April, according to its flash estimate. The reading was the highest since August 2023, based on Eurostat’s monthly series. The move comes as the European Central Bank has already warned that higher energy prices tied to the war in the Middle East were pushing up its 2026 inflation outlook. The May estimate gives policymakers a fresh data point days before the ECB’s next rate-setting cycle. ### How much did inflation rise in May? Eurostat said the annual rate for the 20-country euro area was 3.2% in May, up 0.2 percentage points from April’s 3.0%. Month on month, consumer prices rose 0.1%, according to the flash estimate. Eurostat said the estimate is based on the Harmonised Index of Consumer Prices, the measure used across the bloc for inflation comparisons and ECB policy assessment. (ec.europa.eu) August 2023 was the last month when euro area inflation was higher than the May 2026 reading, according to Eurostat’s historical data. That makes the May figure the highest in nearly three years. Eurostat’s release said the next flash estimate, for June, is scheduled for July 1. (ec.europa.eu) ### Which prices pushed the headline number higher? Energy prices posted the fastest annual increase among the main components tracked by Eurostat. Eurostat said energy inflation was 3.8% in May, up from 3.6% in April, while services inflation accelerated to 4.1% from 4.0%. Food, alcohol and tobacco inflation slowed to 3.1% from 3.3%, and non-energy industrial goods eased to 0.6% from 0.7%. (ec.europa.eu) The ECB said in March that its staff had revised up the 2026 inflation outlook “because energy prices will be higher owing to the war in the Middle East.” In a May 26 blog post, ECB economists said the shock from the war between the United States and Iran had quickly lifted euro area firms’ expectations for input costs, selling prices and short-term inflation. (ec.europa.eu) ### What does the core measure show? Eurostat said inflation excluding energy, food, alcohol and tobacco was 2.6% in May, unchanged from April. That measure, often watched as a gauge of underlying price pressures, stayed above the ECB’s 2% medium-term target. Services remained the largest contributor to underlying inflation pressure, with the annual rate above 4%. (ecb.europa.eu) The ECB’s March staff projections put headline inflation at 2.6% for 2026 and inflation excluding energy and food at 2.3% for the year. Those projections were compiled with information up to March 11 and already incorporated higher energy prices linked to the Middle East war. ### Which countries recorded the highest national rates? (ec.europa.eu) Eurostat said Estonia had the highest annual inflation rate among the euro area countries included in the flash release, at 5.3%. Slovakia followed at 5.0%, while Croatia and Latvia were both at 4.7%. Cyprus recorded the lowest rate at 0.4%, followed by France at 0.6%. (ecb.europa.eu) France and Cyprus were among the few countries with inflation well below the euro area average, while several Baltic and central European members remained well above it. Eurostat’s country breakdown in the flash release is preliminary and can be revised in the final publication. (ec.europa.eu) ### What comes next for the data and the ECB? June 17 is the date for Eurostat’s full May inflation release, which will include revised component and country detail. July 1 is the scheduled date for the June flash estimate. The ECB’s projections page says staff forecasts remain a key input into Governing Council decisions as officials assess inflation, growth, wages and energy costs across the euro area. (ec.europa.eu)