Inflation in the euro area climbed to 2.6% in May, up from 2.4% in April, marking the highest level since February. This increase comes despite a slowdown in monthly consumer price growth, which rose just 0.2% in May, down from 0.6% in April and representing the smallest monthly rise since January.
Services Drive Inflation
Much like in the United States, the service sector is the primary driver of inflation in the euro area. Prices for services increased by 1.83% year-over-year, significantly outpacing the 0.77% rise in goods prices.
Food, Alcohol & Tobacco Lead Goods Inflation
Within the goods category, food, alcohol, and tobacco were the biggest contributors to inflation, adding 0.51 percentage points to the overall rate. Non-energy industrial goods followed, contributing 0.18 percentage points, while energy added a modest 0.04 percentage points.
Varied Inflation Rates Across the Euro Area
Inflation rates varied significantly across the euro area. The highest annual rates were recorded in:
- Romania: 5.8%
- Belgium: 4.9%
- Croatia: 4.3%
In contrast, the lowest rates were observed in:
- Latvia: 0.0%
- Finland: 0.4%
- Italy: 0.8%
The return of inflation to higher levels underscores the ongoing economic challenges within the euro area as it navigates post-pandemic recovery and external pressures.
