MNI Eurozone Inflation Preview – May 2024

German Travel Ticket to Push Services Higher

• After nine consecutive months of disinflation, Eurozone core HICP is expected to remain steady at 2.7% Y/Y in May. Meanwhile, headline inflation is expected to rise a tenth to 2.5% Y/Y.
• The May flash inflation round provides one of the last key data inputs before the ECB’s June meeting, where a 25bp cut is virtually unanimously expected.
• With a June cut all but confirmed, May’s inflation figures will help inform the broader question of “what next?” for the ECB.
• After March and April’s services inflation prints were distorted by the impact of the early Easter weekend on some components, the May data is expected to provide a “cleaner” indication of underlying Eurozone services inflation pressures.
• However, the inclusion of the 49 euro German public transport ticket (introduced in May 2023) into the annual comparison may complicate this interpretation, with the ticket set to be a key driver in pushing services HICP back toward 4.0% Y/Y and keeping core HICP steady versus April.
• Our preview includes analysis of price categories to watch, assessments of underlying inflation trends, outlooks for the French, German, Spanish, and Italian national inflation prints, and sell-side analyst previews.

FOR FULL PDF ANALYSIS:

May2024EZCPIPreview.pdf