By Ed Frankl


Higher energy prices drove inflation in the eurozone further beyond the European Central Bank's target in May, cementing expectations that policymakers will raise the key interest rate next week.

Ahead of the first U.S. and Israeli strikes on Iran at the end of February, inflation in the 21-nation currency area had been close to the ECB's 2% target for around a year, falling below the threshold to 1.7% in January. The central bank's President Christine Lagarde had repeatedly said monetary policy was in a "good place."

But the conflict and the impact of the closure of the Strait of Hormuz led to a surge in global oil and natural-gas prices, with the eurozone particularly exposed as a net importer of energy.

Eurozone inflation rose to 3.2% in May, a fourth-straight increase and the highest level since September 2023, statistics agency Eurostat said Tuesday, up from 3.0% in April. Economists polled by The Wall Street Journal also expected 3.2%.


Write to Ed Frankl at edward.frankl@wsj.com


(END) Dow Jones Newswires

06-02-26 0517ET