font size
The eurozone's annual inflation rate rose faster than expected in May, official data showed on Friday, but the European Central Bank is expected to cut interest rates again next week.
Consumer prices in the single currency area rose 2.6% year-on-year in May, up from a 2.4% rise in April, the EU Statistics Office said.
This figure is higher than the ECB's target of 2%.
ECB officials will be disappointed by the core inflation data, which subtracts volatile energy, food, alcohol and tobacco prices. Core inflation is an important indicator for the ECB.
That rate rose to 2.9% in May from 2.7% in April, according to the data.
Analysts surveyed by FactSet and Bloomberg expected consumer prices to rise to 2.5% and core inflation to remain stable.
But analysts said the figure was unlikely to prevent the ECB from cutting interest rates on June 6.
The ECB began aggressively raising interest rates in July 2022 to stem a spike in inflation, but has kept borrowing costs flat over the past few months as pressure to cut interest rates mounts.
“The temporary rise in inflation does not preclude a clearly communicated rate cut in June,” said Riccardo Marcelli Fabiani, senior economist at Oxford Economics.
“However, the European Central Bank is cautious and unlikely to cut rates at its July meeting, especially given the temporary break in disinflation and strong wage data in the services sector,” it added.
Services recorded the largest price increase in May at 4.1%, up from 3.7% the previous month.
Energy prices rose 0.3% again in April after falling 0.6% in April after months of decline.
Price increases for food, alcohol and tobacco slowed to 2.6% in May from 2.8% the previous month.
Latvia had the lowest inflation rate in the entire euro zone at 0.2% in May, according to Eurostat data. In second place was Finland, with an inflation rate of 0.5% in May.
Belgium had the highest rate at 4.9%.
Raz/EC
