© Reuters

By Geoffrey Smith 

Investing.com — Inflation in the Eurozone surged to a new record high in May, piling more pressure on the European Central Bank to end its money-printing and bring its key interest rates back above zero.

Preliminary figures from Eurostat showed rose to 8.1% in the 12 months through May, up from 7.4% in April and well ahead of analysts’ forecasts for a rate of 7.7%. 

The rise in prices of 0.8% was also above forecasts for 0.6%.

The development had been expected already after Germany, Spain, and Belgium on Monday. 

The weakened ahead of the release after two senior ECB officials, Bank of France Governor Francois Villeroy de Galhau and his Italian counterpart Ignazio Visco, both signaled that they didn’t see the numbers as any reason to hike the ECB’s deposit rate by more than 25 basis points in July. That’s the course that the central bank’s President and chief economist have outlined in the last week.  

“The latest inflation figures for May, in France and in the other countries, confirm the rise that we expected, and the necessity of a gradual but resolute monetary normalization,” Reuters quoted Villeroy as saying earlier.

Analysts were more forthright. 

“Another eye watering inflation number for the eurozone at 8.1% in May,” said Angel Talavera, head of European Economics with Oxford Economics, via Twitter. He warned that there were clear signs inflationary pressure is no longer contained to high oil and gas prices, which were the initial driver of the current wave. 

“Although more than half of it (is) still driven by energy, food and services prices are going to be increasingly taking over the coming months,” Talavera said.