EURIBOR: EURIBOR FIX

EZ FLASH MAY HICP +0.8% M/M, +8.1% Y/Y (FCST 7.8%); APR +7.4% Y/Y

EZ FLASH MAY CORE HICP +0.5% M/M, +3.8% Y/Y (FCST 3.6%); APR +3.5% Y/Y

• The May flash estimates saw inflation come in hotter than forecasts, reaching a fresh Euro-era high og +8.1% y/y and beating the consensus forecast by 0.3pp. Prices accelerated by 0.8% m/m, quickening by 0.2pp on April and the forecast.
• Energy prices surged further in the estimates, reaching +39.2% y/y (vs +37.5% in April), followed by food, alcohol and tobacco (+7.5% vs +6.3% in April). Non-energy industrial goods rose 4.2% y/y and services ticked up +3.5% y/y.
• Underlying core inflation saw a concerning 0.3pp jump to +3.8% y/y, a further 0.2pp ahead of expectations.
• This adds fuel to the argument that the ECB should act more aggressively in coming meetings. However, the tightening cycle looks set to kick off with a 25bp hike in June following Chief Economist Philip Lane’s comments which had suggested that 50bp is off the table for now.
• The highest flash inflation rates were recorded in Estonia (+20.1% y/y), Lithuania (+18.5% y/y), Latvia (+16.4% y/y) and Slovakia (+11.8% y/y), whilst in Western Europe, the Netherlands (+10.2% y/y) contributed considerable upwards pressure.