Eurozone inflation experiences a minor uptick once more.
Eurozone's inflation rate is back on the rise. Consumer costs climbed by 2.6% within a year across the 20-nation coalition in May, as per Eurostat, the EU's stats agency. This figure aligns with the preliminary estimate. In April, the rate stood at 2.4%. The ECB, with an inflation goal of 2.0%, finds this initial increase in 2022 inconvenient. In early June, the ECB slashed interest rates for the first time in nearly five years.
To a large extent, currency traders have stuck to their set strategies in light of this latest inflation rise. However, the ECB is reluctant to lock down a specific interest rate trajectory, as stated by ECB President Christine Lagarde.
The inflation rate, when excluding the volatile energy, food, alcohol, and tobacco prices, hit 2.9% in May from 2.7% in April. The ECB closely monitors this figure, as it provides a clear reflection of underlying inflation trends.
In a Reuters interview, ECB Chief Economist Philip Lane expressed optimism regarding a potential fall in inflation to the target. Though the path may be rocky, the ECB is expected to hit its 2.0% target in the second half of 2025, as per other currency traders as well. The general downward trend remains intact, they noted.
Energy costs within the currency union saw a 0.3% yearly increase in May. After sliding by 0.6% in April, they had dropped. Prices for food, alcohol, and tobacco ticked up by 2.6% after a hike of 2.8% in April. Prices for non-energy industrial goods rose by 0.7% following a climb of 0.9% in the prior month. Meanwhile, prices for services, currently a focus for the ECB, jumped by 4.1% after a rise of 3.7% in April.
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The Eurozone's inflation rate climbed to 2.6% in May, which is higher than the 2.4% recorded in April. Despite this increase, the ECB finds this initial surge in 2022 inconvenient as it moves further away from its inflation goal of 2%.
Given the recent uptick in inflation, the ECB President Christine Lagarde has been reluctant to commit to a specific interest rate trajectory.
