ECB under pressure as eurozone inflation jumps to 3.2%

2nd Jun 2026 09:01

(Sharecast News) - Eurozone inflation rose to 3.2% last month, an official flash estimate showed on Tuesday, as higher energy prices caused by the US-Israel war on Iran and Lebanon put the European Central Bank under more pressure to lift interest rates.

The figure compares with 3% in April - well above the ECB's 2% target. Policy makers at the central bank meet next week to vote on rates.

Energy inflation rose to 10.9% in May, while services rose by 3.5% year on year.

"This morning's eurozone inflation print all but confirms a rate hike from the European Central Bank," said Harry Woolman, Global Capital Markets Analyst at Validus Risk Management.

"The last fortnight has seen a growing narrative from policymakers in favour of a move higher in the ECB's deposit rate, owing to the gradual feed through from inflationary pressures originating in the Middle East."

"A notable slowdown in consumer discretionary spending from elevated price pressures, as well as tightening credit conditions, contributed to last week's PMI data release for the bloc, which highlighted activity falling into contractionary territory for the first time since 2024."

The central bank, therefore, is set to face a medium-term headache as stagflationary concerns mount and the second-round effects of the conflict become more pronounced."

Reporting by Frank Prenesti for Sharecast.com