Eurozone inflation hits three-year high

Today, June 1, the EU Statistical Office (Eurostat) announced that in May, inflation in the euro area will be, according to preliminary estimates, 2%, which will be the highest since October 2018. At the end of April, inflation in the euro area amounted to 1.6%. The acceleration in inflation was due to a sharp rise in energy prices in May – by 13.1%.

The second place in terms of price growth was taken by the services market – 1.1%, followed by industrial goods – 0.7% and the segment of food products, alcohol and tobacco – 0.6%. For this reason, the index of core inflation – excluding prices for energy and food – in the euro area in May amounted to 0.9%, a month earlier – 0.7%. The highest price increases in May were recorded in Luxembourg (4%), Lithuania (3.5%), Estonia (3.1%) and Austria (3%). A negative indicator of inflation in May was noted in one country of the eurozone – in Greece (-1.1%).

Some European media have already noted that the release of May data on inflation in the euro area, which, among other things, for the first time since 2018, approached the maximum allowable threshold of the ECB, could put pressure on the monetary policy of the European authorities. Analysts suggest that given the data released earlier on inflation in the US, which became the highest since 2008, investors may be worried about the prospects for early winding down of stimulus to the EU economy.

However, commenting on the May inflation data, ECB President Christine Lagarde and ECB Chief Economist Philip Lane tried to calm the market, saying that they consider this situation temporary. “There is no connection between any price spikes in the opening (after the pandemic.— “B”) the economy and what is happening with the inflationary trend, ”said Mr. Lane. European exchanges reacted calmly to the May inflation data today, closing 0.6-0.9% above yesterday’s closing level.

Evgeny Khvostik