Middle East war drives up energy costs, Eurozone inflation hits 3.2%
Due to surging energy costs from the Middle East war, Eurozone inflation reached 3.2% in May. This exceeds the ECB's 2% target, increasing the likelihood of interest rate hikes. Core inflation also rose to 2.5%.
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- 📰 Published: June 2, 2026 at 19:59
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(CNA, Brussels, June 2) Official data released today shows that due to a sharp rise in energy costs caused by the war in the Middle East, the Eurozone's inflation rate reached 3.2% in May, increasing the likelihood of interest rate hikes in the single currency area.
AFP reported that the European Union's statistics office, Eurostat, stated that the year-on-year increase in consumer prices accelerated to 3.2% last month, up from 3.0% in April.
The figure is in line with estimates from a Bloomberg survey of analysts, but lower than the 3.3% forecast by economists surveyed by financial data provider FactSet.
The Eurozone inflation rate has risen for three consecutive months and is already significantly higher than the 2% target set by the European Central Bank (ECB).
Core inflation data is of particular interest ahead of the ECB's next meeting on the 11th. This indicator excludes volatile energy and food prices.
According to Eurostat, core inflation rose to 2.5% in May, up from 2.2% in April, and higher than the 2.4% forecast by economists surveyed by Bloomberg and FactSet.
Analysts and investors have been expecting the ECB to raise interest rates to demonstrate its determination to curb inflation.
Carsten Brzeski of ING Group noted in a report: "This is an expected rise in inflation, which will prompt the central bank to decide on an 'insurance' rate hike."
As the EU economy is a net importer of energy, it is more sensitive to energy price fluctuations.
Energy inflation rose slightly from 10.8% in April to 10.9% in May, while service inflation surged from 3.0% to 3.5%.
The European Commission expects inflation to remain above the ECB's target this year.
Brussels has significantly raised its 2024 inflation forecast for the 21 Eurozone countries to 3.0%, up from its previous estimate of 1.9%.
AFP reported that the European Union's statistics office, Eurostat, stated that the year-on-year increase in consumer prices accelerated to 3.2% last month, up from 3.0% in April.
The figure is in line with estimates from a Bloomberg survey of analysts, but lower than the 3.3% forecast by economists surveyed by financial data provider FactSet.
The Eurozone inflation rate has risen for three consecutive months and is already significantly higher than the 2% target set by the European Central Bank (ECB).
Core inflation data is of particular interest ahead of the ECB's next meeting on the 11th. This indicator excludes volatile energy and food prices.
According to Eurostat, core inflation rose to 2.5% in May, up from 2.2% in April, and higher than the 2.4% forecast by economists surveyed by Bloomberg and FactSet.
Analysts and investors have been expecting the ECB to raise interest rates to demonstrate its determination to curb inflation.
Carsten Brzeski of ING Group noted in a report: "This is an expected rise in inflation, which will prompt the central bank to decide on an 'insurance' rate hike."
As the EU economy is a net importer of energy, it is more sensitive to energy price fluctuations.
Energy inflation rose slightly from 10.8% in April to 10.9% in May, while service inflation surged from 3.0% to 3.5%.
The European Commission expects inflation to remain above the ECB's target this year.
Brussels has significantly raised its 2024 inflation forecast for the 21 Eurozone countries to 3.0%, up from its previous estimate of 1.9%.
FAQ
What happens when Eurozone inflation rises?
The European Central Bank may raise interest rates to stabilize the currency and control inflation.