Eurozone inflation hits highest level since 2023

Eurostat confirmed eurozone inflation rose to 3.2% in May from 3.0% in April, the highest since September 2023 and third straight month above the ECB’s 2% target.elconfidencial
Energy prices surged 10.8% year-over-year amid the Middle East conflict, while core inflation accelerated to 2.6%, suggesting price pressures are broadening.elconfidencial
Italy’s inflation hit a 32-month high at 3.2%, while Romania led the EU at 9.7%; only Germany saw headline inflation ease, to 2.7%.fakti

Eurozone Inflation Confirmed at 3.2% in May as Energy and Services Drive Prices Higher

Eurostat confirmed on Monday that annual inflation in the eurozone rose to 3.2% in May, up from 3.0% in April, marking the highest rate since September 2023 and the third consecutive month above the European Central Bank’s 2% target. The data reinforces the case for the ECB’s recent decision to raise interest rates at its June meeting.elconfidencial

Energy and Services Lead the Surge

Energy prices remained the dominant force behind the acceleration, rising 10.8% year-on-year in May amid the ongoing conflict in the Middle East. Services inflation also climbed to 3.5% from 3.0% in April, contributing 1.61 percentage points to the overall rate — the largest single component. Core inflation, which strips out energy and food, accelerated to 2.6% from 2.2%, a sign that price pressures may be broadening beyond volatile commodities.europeantimes

For the broader European Union, the inflation rate reached 3.3%, up from 3.2% in April. Romania posted the highest rate in the bloc at 9.7%, followed by Bulgaria at 6.3% and Lithuania at 5.1%. Sweden recorded the lowest at 1.1%, followed by Denmark and the Czech Republic at 1.8%.protothema

Italy Hits 32-Month High

Italy’s national statistics office ISTAT confirmed that the country’s annual inflation rate climbed to 3.2% in May from 2.7% in April, its highest level in 32 months. Energy products outside the regulated segment surged 12.5% on an annual basis, while regulated energy prices accelerated to 5.6%. The harmonized index used for EU comparisons came in at 3.2%, revised slightly down from the preliminary estimate of 3.3%.reuters

Broader Implications

The energy shock, linked to the war involving Iran in the Middle East, has halted what had been a prolonged disinflation trend across Europe. The World Bank projects energy prices will rise 24% globally in 2026, the largest annual increase since Russia’s invasion of Ukraine. Among the eurozone’s largest economies, only Germany saw headline inflation slow in May, to 2.7%, after the government reduced fuel taxes to cushion the impact of war-linked price increases.pie