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Eurozone inflation rose to 3.2% in May 2026, driven by energy costs from the Iran war. The ECB raised interest rates to 2.25% to curb rising prices.
Eurozone inflation accelerated to 3.2% in May 2026, driven by elevated energy costs stemming from the ongoing war in Iran [3]. In response, the European Central Bank (ECB) raised its main deposit rate to 2.25%, marking the first increase since 2023 as policymakers attempt to curb price growth [1]. The move comes as oil prices remain above $90 a barrel, keeping inflation well above the central bank’s 2% target [1].
Key takeaways
Official data showed energy prices rose by 10.9% annually in May, a slight increase from the previous month, solidifying energy as the highest contributor to consumer price growth [3]. While inflation for food, alcohol, and tobacco cooled to 2%, services inflation accelerated to 3.5% and core inflation climbed to 2.5% [3][4]. The impact varies across the bloc; Germany’s annual inflation dipped to 2.7%, while France saw a
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Europe remains a major net energy importer, making its economy highly vulnerable to price shocks and supply disruptions in global energy markets.
Companies in the euro zone are reportedly cutting jobs at the fastest pace since late 2020 as they respond to higher energy costs and reduced demand.
Markets are pricing in a 94% probability that the European Central Bank will raise its key interest rate by 25 basis points at its next meeting.
AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 4 outlets · Jun 12, 2026 · How we report
Core inflation, which excludes volatile food and energy prices, rose to 2.5% in May, up from 2.2% in April.