Euro area inflation round up

Following upside surprises in Spain and Italy (last week), German preliminary consumer prices also came in on the strong side. German HICP inflation stood at +0.7% y/y in May (consensus: +0.6%) from 0.3% y/y  previously.

"Euro area 'flash' HICP inflation (due for release tomorrow) is expected to have increased to +0.2% in May, risks seem surrounding the forecast as skewed to the upside. Meanwhile, core HICP inflation likely to have increased to +0.7% y/y, up 0.1pp from April", estimates Barclays.

Given the lack of details available at this stage, analysts refrain from drawing strong conclusions from the preliminary round of May inflation data released so far at country level. However, non-core prices, including energy and unprocessed food, are believes to be the most likely candidates to have led the May headline increase, possibly alongside a further rise in non-energy industrial goods prices, says Barclays.

Therefore, after the release of euro area 'flash' HICP breakdown tomorrow, the focus will shift to the ECB press conference (Wednesday), and in particular President Draghi's interpretation of the recent recovery in the headline inflation trend.