Annual inflation in the Euro Area has hit a record high for the seventh month in a row at 8.1 per cent in May 2022, up from 7.4 per cent in the previous month of April.

The inflation rate a year ago was 2.0 per cent. Annual inflation in the European Union reached 8.8 per cent (April 8.1 per cent), while it was 2.3 per cent a year earlier.

The lowest annual rates were recorded in France and Malta at 5.8 per cent and Finland at 7.1 per cent, while the highest was across the Baltic States, with Estonia at 20.1 per cent, Lithuania at 18.5 per cent and Latvia at 16.8 per cent.

In comparison to April, the annual inflation only fell in one member state and rose in twenty-six.

The largest contributors to the annual euro area inflation were ‘Energy’ (+3.87 percentage points, pp), ‘food, alcohol and tobacco’ (+1.59 pp), ‘services’ (+1.46 pp) and ‘non-energy industrial goods’ (1.13 pp). Rising prices have been intensified over recent months by the war in Ukraine, particularly food and energy costs.

Energy costs increased by 39.2 per cent in May (April 37.5 per cent) and food, alcohol and tobacco prices increased by 7.5 per cent (April 6.3 per cent). Inflation without energy and food prices still increased from 3.5% to 3.8%.

This is still below the close to six per cent core inflation being experienced currently in the US and the UK. European Central Bank president, Christine Lagarde, said she was anticipating a rate rise at the central bank’s meeting in July and “we are likely to be in a position to exit negative interest rates by the end of the third quarter”.