Euro zone inflation rises by more than expected in May - Eurostat

Investing.com -- The year-on-year pace of headline inflation in the euro zone accelerated by more than anticipated in May, while the monthly rate slowed, in a release that could factor into how officials at the European Central Bank approach upcoming interest rate decisions.

On an annualized basis, the consumer price index (CPI) for the bloc increased by 2.6%, quicker than the 2.4% uptick in April and ahead of economists' estimates of 2.5%, according to preliminary data from Eurostat. Month-on-month, however, the measure decelerated to 0.2% from 0.6%.

Stripping out volatile items like food and fuel, so-called "core" CPI rose by 2.9% in the 12 months to May. Analysts were expecting it to match the prior month's mark of 2.7%. When compared to April, underlying inflation cooled to 0.4% from 0.7%.

The services industry is expected to have had a heavy influence on inflation this month, followed by food and alcohol, non-energy industrial goods, and energy, Eurostat said.

Friday's price growth figures come as the ECB prepares to hold its latest policy meeting next week. Officials at the central bank have recently indicated they intend to slash its key deposit rate down from record highs at the gathering, citing signs that inflation is easing back down toward its 2% target.

But it remains unclear what the ECB will do after June, with some analysts flagging concerns that inflationary pressures could prove to be stubbornly entrenched in the months ahead.