Eurozone Preliminary CPI misses estimates with 0.1% YoY in May, EUR/USD keeps highs

According to Eurostat’s flash reading of Eurozone CPI report, the annual reading came in at +0.1% in May, meeting expectations of +0.2% and +0.3% previous.

The headlines inflation hit the lowest since June 2016, as the coronavirus pandemic imposed lockdown reduced fuel and energy demand.

Meanwhile, the core figures steadied at +0.9% in the reported month when compared to +0.8% expectations and +0.9% previous.

Key details (via Eurostat):

“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in May (3.3%, compared with 3.6% in April), followed by services (1.3%, compared with 1.2% in April), non-energy industrial goods (0.2%, compared with 0.3% in April) and energy (-12.0%, compared with -9.7% in April)”

The Eurozone inflation report comes a day after the German Prelim CPI data was released, which showed that the German consumer price inflation accelerated by 0.5% in May and moved further away from the European Central Bank’s (ECB) rate target of just under 2% for the Eurozone as a whole.

FX implications

The mixed Eurozone inflation figures failed to deter the EUR bulls, as EUR/USD clinches fresh two-month highs at 1.1117 on the data release.