Luxembourg inflation up again as eurozone dips into safe zone

The annual inflation rate at the end of May was 2.1% in Luxembourg and 1.9% across the eurozone. The European Central Bank target rate of inflation is 2%.

If the preliminary May data from Eurostat, the EU statistics bureau, proves accurate, it is likely further cuts to interest rates will occur later in the year after the one widely predicted on Thursday, 5 June. Eurostat will release its confirmed May inflation data on 18 June.

The early estimate shows Luxembourg’s inflation rate jumping half a percentage point between April and May, up to 2.1% from 1.7%. If accurate, it would be the largest monthly shift this year and return the country to levels last seen in January.

Across the euro area, energy prices are believed to have fallen 3.6% since May 2024, while all other categories became more expensive. Food, alcohol and tobacco were up 3.3% between years, led by a rise in unprocessed food prices of 4.4%. Services also rose in price by 3.2% since May 2024.

At 4.6%, Ireland’s estimated inflation rate in May was the bloc’s highest, while 0.4% in Cyprus was the lowest.

Luxembourg’s statistics office, Statec, will release its own consumer price index data for May on Wednesday, 4 June.