Eurozone HICP Preview: Forecasts from five major banks, inflation to hit new record

The eurozone will release its May Harmonised Index of Consumer Prices (HICP) report on Tuesday, May 31 at 09:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the upcoming EU inflation print.

Expectations are for HICP to rise further to 7.7% YoY in April (prev. 7.4%), with the core metric (ex-food and energy) seen rising to 3.5% YoY.

Commerzbank

“The rate is likely to have jumped from 7.4% to 8.0% in May. The decline in energy prices in April did not continue. More had to be paid again for all types of energy in May. The YoY rate of change is likely to have risen from 37.5% to 39%. This alone increases the inflation rate in May by 0.15 percentage points. The inflation rate excluding energy, food, alcohol and tobacco is likely to have risen further from 3.5% in April to 3.8% in May. The jump in food prices is even greater. Here, the YoY rate is likely to have climbed from 6.3% to 7.3%, which in itself pushes up the inflation rate by 0.2 percentage points.”

SocGen

“We expect euro area HICP to have increased by 0.5 pp to 7.9% YoY in May, with core inflation remaining at 3.5% YoY.”

Wells Fargo

“For May, headline inflation is expected to quicken further to a new record high of 7.7% year-over-year. Meanwhile, core CPI inflation is expected to remain steady at 3.5% YoY. We believe these inflation trends will leave the European Central Bank on course to begin raising interest rates at the July announcement, and we anticipate a 25 bps increase in the Deposit Rate to -0.25% at that meeting.”

TDS

“Euro area headline HICP inflation will likely reach new serie high in May (7.8%), with a rebound in fuel prices and continued acceleration in food inflation likely being the main drivers. However, we look for EZ core inflation to soften 0.1ppts to 3.4% YoY due to weakness in the non-energy industrial goods component.”

Danske Bank

“Following the high country releases, we see significant upside risks to our original expectations at 8.1% YoY and core inflation at 3.6% YoY.”