Surging food and fuel prices drove euro zone inflation to a new record high of 3.7 per cent year-on-year in May, data showed, likely cementing expectations that the European Central Bank will raise rates on July 3rd.
The European Union's statistics office revised upwards its previous May inflation estimate of 3.6 per cent following higher-than-expected price rises in several of the 15 euro zone countries, including the two biggest - Germany and France.
Data released from the Central Statistics Office (CSO) last week showed that Ireland's annual rate of inflation accelerated to 4.7 per cent in May from 4.3 per cent in April.
Eurostat said today prices rose 0.6 per cent month-on-month in May for a 3.7 per cent annual gain - the highest annual increase since measurements for the zone started in 1997. This compares with 3.3 per cent annual inflation in April and 3.6 in March.
Economists had expected consumer price growth at the initial Eurostat estimate level, although several had forecast the possibility of an upward revision after the national inflation numbers came out last week.
Food, alcohol and tobacco prices rose 5.7 per cent annually while energy costs jumped 13.7 per cent, mainly driven by oil, which jumped from around $110 a barrel at the start of the month to $135 towards the end of May - twice the year-earlier price.
What the ECB calls core inflation, or without the volatile energy and unprocessed food costs, prices in May grew by 0.2 per cent on the month and 2.5 per cent year-on-year.
The measure excluding energy, food, alcohol and tobacco, which many economists watch to see if rising oil prices are affecting other sectors, rose 0.3 per cent on the month and 1.7 per cent on the year.
The ECB wants inflation to be just below 2 per cent. It said earlier this month that it may raise interest rates "by a small amount" on July 3rd, to better anchor inflation expectations because price growth would be higher and last longer than previously expected.
In the euro zone's biggest economy, Germany, inflation was 0.7 per cent month-on-month and 3.1 per cent year-on-year. In the second-biggest, France, prices grew by 0.6 per cent on the month and 3.7 per cent year-on-year, the same as in third-biggest Italy.
Slovenia had the highest annual inflation rate of 6.2 per cent, followed by Belgium with 5.1 per cent and Greece with 4.9 per cent. Fourth-biggest Spain had 4.7 per cent.