Eurozone inflation rose to 3.2% in May, driven by a strong rise in energy prices. According to data released on Tuesday, the figures were in line with forecasts by economists polled by Reuters and could confirm expectations of an interest rate hike by the European Central Bank next week.
Energy prices posted a record increase in annual inflation in May at 10.9 percent, up slightly from the previous month’s 10.8 percent. In services, inflation also rose from 3% to 3.5%. At the same time, food, alcohol and tobacco prices fell slightly – from 2.4% to 2%.
Inflation varied widely between countries. In Germany, Europe’s largest economy, annual inflation fell to 2.7%, while in Greece and Lithuania it exceeded 5%. In France, inflation rose from 2.5% to 2.8%.
As a major energy importer, Europe is particularly sensitive to energy crises.
According to LSEG, markets are pricing in the likelihood of a 25 basis point increase in the ECB’s key interest rate at the next meeting.
