Preliminary national readings published on Friday indicate that inflation in the euro area’s four largest economies stayed above the European Central Bank’s 2% objective for a third straight month in May.
Country-by-country snapshot
- France recorded inflation of 2.8% in May, up from 2.5% in April.
- Italy’s inflation rate rose to 3.2% from 2.7% the previous month.
- Spain’s rate held at 3.2% in May.
- German states that have reported so far, including Bavaria and Baden-Wuerttemberg, showed falling inflation rates.
The decline in German inflation readings follows a government-backed fuel discount that was applied in May and will continue into June, a measure intended to blunt the impact of higher petrol prices.
Drivers within countries
- Spain and Italy experienced notable increases in prices for transportation and entertainment.
- France saw fresh food costs rise by 4.1% and a small uptick in services inflation.
Oil and broader inflation context
Oil prices have eased since late April. Brent crude traded around $92 per barrel, down from about $118 at the end of April. Despite that decline, current crude prices remain above roughly $70 per barrel that was observed prior to the war between the United States and Iran, according to the available data.
Euro zone-wide figures, which are due on Tuesday, are expected to show headline inflation at 3.3% for May, with core inflation - which excludes energy, food, alcohol and tobacco - forecast at 2.4%.
Looking at underlying measures in two of the large economies, Italy’s underlying inflation edged up to 1.8% from 1.6%, while Spain’s underlying rate rose to 2.9% from 2.8%.
The preliminary national releases paint a picture of continued price pressure across key euro area economies in May, with energy movements and food and services costs contributing unevenly across countries. Full euro zone aggregates and more detailed breakdowns are scheduled for release on Tuesday.