Eurozone inflation hits record 8.1% in May
By Michele Maatouk
Date: Tuesday 31 May 2022
(Sharecast News) - Eurozone inflation hit a record 8.1% in May as energy prices surged, according to a flash estimate released on Tuesday by Destatis, adding pressure on the European Central Bank to hike rates.
Inflation rose from 7.4% in April, hitting the highest level since records began in 1997. This was driven by food and energy inflation, which jumped to 7.5% and 39.2%, respectively, from 6.3% and 37.5% in April. Analysts had been expecting inflation to come in at 7.6%.
The ECB has an inflation target of 2%.
Core inflation - which excludes food, energy, alcohol and tobacco - rose to 3.8% in May from 3.5% the month before, as both services and non-energy goods inflation increased.
Andrew Kenningham, chief Europe economist at Capital Economics, said: "With headline and core inflation rising more than expected yet again, the case for exiting from negative interest rates promptly is now irrefutable.
"The ECB looks sure to confirm next week that it will raise rates in July and we suspect that it will leave the door open to a 50 basis points hike."
Bert Colijn, senior Eurozone economist at ING, said: "Yesterday, ECB chief economist Phillip Lane tried to slam the door shut on a 50 basis point hike in July, preferring the gradual path of President Christine Lagarde of 25 basis points in July and 25 basis points in September.
"While that seems like a done deal to us, this surprise in core inflation and sanctions developments regarding energy will no doubt lead to hawks trying to get a foot in the door again for a faster pace of lift-off."
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