Services inflation accelerates in the Eurozone, reinforcing expectations for further ECB rate hikes this year.
Eurozone headline inflation climbed to 3.2% in May, up from April, driven by persistent energy costs and rising services inflation. Core inflation surprised at 2.5%, exceeding expectations and signaling underlying price pressures remain strong.
The increase aligns with recent trends, as energy continues to be the primary contributor, while food inflation also remains elevated. Services inflation, a key focus for the ECB, accelerated, supporting calls for additional monetary tightening.
Markets are pricing in a higher likelihood of further ECB rate hikes in the coming months, as policymakers prioritize bringing inflation back to target.