Eurozone inflation surprises to the upside
Eurozone preliminary annual headline inflation printed at an all-time high of 8.1% for May. This number is higher than the forecast of 7.8% and above the previous month's release of 7.5%. The major contributor was the much higher energy prices due to Russia's invasion of Ukraine. However, it's not the only concern. Food, alcohol and tobacco price increases also contributed to the blowout figure.
Core inflation, which strips out these volatile items, was also ahead of forecast, coming in at 3.8% YoY. The forecast was 3.6% (YoY), and the print for April was 3.5% (YoY). This indicates that higher production prices are being passed on to the consumer. Last week we wrote on President Lagarde's hawkish blog post. The rate hike for July is likely to remain at 25bps. However, today's substantial inflation numbers will introduce discussion around raising from 25bps to 50bps for September's hike.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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