The annual Eurozone Harmonised Index of Consumer Prices (HICP) rose in May vs. April’s 7.0%, according to the latest data published by Eurostat this Thursday. The HICP inflation gauge beat expectations for a 6.3% increase.
The Core HICP inflation dropped to 5.3% YoY in May as against the expected 5.5% clip, down from the 5.6% figure booked in April.
On a monthly basis, the old continent’s HICP showed no growth in May vs. April’s 0.6% increase. The core HICP inflation arrived at 0.2% in the reported month when compared to 0.8% expected and 1.0% seen in April.
Germany’s annual HICP for May, released on Wednesday, rose 6.3%, missing 6.8% estimates while slowing from a 7.6% advance seen previously.
Note that the European Central Bank’s (ECB) inflation target is 2%.
The bloc’s HICP figures have a significant impact on the market’s pricing of the ECB rate hikes. Markets are currently pricing an 85% probability of a 25 basis points (bps) ECB rate increase in June.
“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in May (12.5%, compared with 13.5% in April), followed by non-energy industrial goods (5.8%, compared with 6.2% in April), services (5.0%, compared with 5.2% in April) and energy (-1.7%, compared with 2.4% in April).”
The shared currency is picking up minor bids on softer Eurozone inflation data. EUR/USD is recovering toward 1.0700, currently trading at 1.0685, almost unchanged on the day.
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