As a result of rising energy costs, consumer prices in May increased more than expected in May in the euro area, approaching the European Central Bank’s target of 2%.
According to preliminary data released by the European Union’s Statistical Office (Eurostat) on Thursday, it rose by 1.9% in consumer price comparisons in May. After a rise of 1.2 percent in April, analysts accelerated but only 1.6 percent.
As in May, the strongest increase was recorded in April and February last year, reaching 1.9% and 2.0% in the year-on-year comparison.
The annual fluctuation of core inflation, which is often volatile in energy, food, alcohol and tobacco prices, was 1.1 percent in May. Analysts expected 1.0 percent after the 0.7 percent rise in April.
Inflation excluding energy and unprocessed food prices was 1.3 per cent in May, 0.2 percentage points higher than in April.
Energy prices grew most significantly, by 6.1 per cent, food, tobacco and alcohol beverages by 2.6 per cent, and services grew by 1.6 per cent in May.
In Italy, the annual pace of financial deterioration has risen from 0.6 per cent to 1.1 per cent in France and from 1.8 per cent to 2.3 per cent, according to data released by national statistical offices on Thursday. In the euro area’s largest economy, consumer prices in Germany rose by 2.2 per cent from one-year earlier than 1.6 per cent in April.
The primary objective of the European Central Bank is to maintain price stability, with the aim of keeping inflation in the medium term at less than 2 per cent but close to it. The stronger than expected figures are likely to strengthen monetary tighteners, including Jens Weidmann, the Bundesbank President, who want the European Central Bank to close its massive asset purchase program by the end of the year and launch the interest rate boost cycle next year.
The Governing Council of the ECB will meet on 14 June next, but will most likely only decide on its 26 July meeting on the date of the closing of the asset purchase program.