Euro Area Inflation Rises More Than Expected in May
Inflation in the Euro Area rose more than expected in May, with consumer prices inching up by 0.2%, according to the latest data. This is a slowdown from April’s 0.6% increase but exceeds economists’ predictions of a 0.1% rise. Despite the month-over-month deceleration, year-over-year growth in inflation climbed to 2.6%, surpassing the anticipated 2.5% and April’s 2.4%.
Key figures:
- Monthly consumer price increase: 0.2% in May (down from 0.6% in April)
- Year-over-year inflation rate: 2.6% in May (up from 2.4% in April)
- Core inflation rate: 2.9% in May (up from 2.7% in April)
The Core: Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, also rose more than expected, reaching 2.9% in May compared to 2.7% in April. Economists had projected no change in core inflation for May.
Why It Matters: The unexpected rise in both headline and core inflation comes just days before the European Central Bank’s (ECB) next meeting, where policymakers are expected to discuss a potential rate cut for the first time since 2019. The higher-than-anticipated inflation figures could influence their decision-making process.
What To Watch: The ECB meeting next week will be closely monitored for any changes in monetary policy. With inflation running hotter than expected, the central bank faces a delicate balancing act between supporting economic growth and keeping inflation in check.
