Eurozone Inflation Surpasses 3% for First Time in Two and a Half Years

Eurozone inflation has exceeded 3% for the first time in two and a half years, reinforcing expectations of a rate hike by the European Central Bank (ECB) at its meeting next week. According to Jin10, the EU's statistics agency reported on Tuesday that the Consumer Price Index (CPI) rose by 3.2% year-on-year in May, up from 3% the previous month and in line with the median forecast of institutions. The core inflation rate, which excludes volatile items such as food and energy, increased significantly to 2.5%, surpassing expectations, while the closely watched services indicator jumped to 3.5%. The market anticipates that the ECB will implement its first rate hike since September 2023 in June. Officials appear to have concluded that they can no longer wait and must respond immediately to the impacts of the Middle East conflict.