Eurozone Inflation Rises to 3.2 Percent as Energy, Services Costs Climb Eurozone inflation increased more than anticipated in May, primarily due to escalating energy prices and a significant rise in services costs. Energy inflation reached its highest annual rate, while services inflation also climbed, and underlying inflation excluding volatile items went up. These trends coincide with reports of renewed cost pressures on European manufacturers, sparking concerns that inflation may persist above the European Central Bank’s target.

• Eurozone inflation rose unexpectedly in May.
• Higher energy prices and increased services costs were the main drivers.
• Energy inflation reached 10.9% annually.
• Services inflation increased to 3.5%.
• Underlying inflation (excluding energy and food) rose to 2.5%.
• European manufacturers are facing renewed cost pressures.
• Concerns exist that inflation may remain above the ECB’s target.