MNI Eurozone Inflation Insight: Services Accelerate Notably

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Key May preliminary HICP prints

• Headline 3.19% Y/Y (3.2% consensus, 3.03% April)
• Core 2.55% Y/Y (2.4% cons, 2.20% April)
• Services 3.46% Y/Y (2.97% April)
• Non-energy industrial goods 0.87% Y/Y (0.79% April)
• Energy 10.94% Y/Y (10.82% April)
• Food / Alcohol / Tobacco 1.97% Y/Y (2.42% April)
  • Unprocessed food 4.24% (4.64% April)
  • Processed Food / Alcohol / Tobacco 1.12% Y/Y (1.59% April)

Executive Summary

• Flash May Eurozone HICP (3.19% Y/Y) came in almost exactly in line with the 3.2% consensus figure (3.25% MNI tracking following national-level data, 3.03% April).
• However, core HICP was stronger than expected at 2.55% Y/Y, above both April's 2.20% as well as consensus which stood at 2.4% for the measure.
• Services inflation accelerated quite sharply in May, to 3.46% (2.97% April). While some anecdotal national-level data suggested that airfares inflation did start picking up in May after a low April Y/Y rate, the overall services pickup in Tuesday’s data is likely somewhat of a surprise. 
• As tightening for next Thursday's ECB's meeting is already firmly priced, we would not overinterpret the print but will watch for underlying drivers in May final data (released June 17)