Annual consumer price inflation in the 20 countries that use the euro rose to 2.6% in May from 2.4% in April, according to preliminary estimates published by the European Union’s statistics office on Friday. That came in slightly above the 2.5% uptick expected by analysts polled by Reuters. The jump was driven by a rise in services inflation to 4.1% in May, up from 3.7% in April, and its highest level since October.
It is still widely expected to start reducing the record cost of borrowing at its meeting on June 6, but Friday’s numbers — which show inflation still tracking above the central bank’s 2% target — has cast doubt among some analysts about what happens thereafter. “May’s increases won’t stop the ECB from cutting interest rates next week. But another reduction in July is now looking unlikely,” Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, wrote in a Friday note.