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Eurozone Inflation Rises for 1st Time in 2024


Fri 31 May 2024 | 11:57 PM
European Union flag Source: Getty Images
European Union flag Source: Getty Images
Taarek Refaat

Annual inflation in the euro zone rose in May for the first time since the beginning of the year, but the European Central Bank (ECB) is still expected to cut interest rates next week.

Consumer prices rose by 2.6% in the single currency area during May, compared to 2.4% in the previous month, according to data from the European Union statistics agency released on Friday.

The core inflation rate, which excludes energy and food prices, rose from 2.7% to 2.9%.

Until this month, euro zone inflation had been falling toward the ECB's 2% target all year, allowing policymakers to clearly signal that they expect to start cutting the benchmark deposit rate from its peak of 4 percent next week. .

The European Central Bank is still widely expected to go ahead with interest rate cuts next week, making it the first major central bank to ease monetary policy since the biggest increase in inflation began three years ago.

But with price pressures rising again this month and the euro zone economy returning to growth in the first quarter, investors expect the ECB to adopt a more cautious approach to cutting interest rates for the rest of this year.

The euro is used in 19 of the 27 member states of the European Union, and average inflation reached its highest level in Belgium at 4.9%.