Euro zone inflation hits new record

STORY: There's fresh pain in store for shoppers after euro zone inflation hit a new record high in May.

It went up to 8.1% in the 19 countries sharing the euro - above April's 7.4% and over analyst projections.

It comes as price growth spread across markets, which implied it was not just energy pulling up inflation anymore.

Prices have gone up sharply over the last year due to supply chain issues and the conflict in Ukraine.

May’s number also challenged the European Central Bank’s view that gradual interest rate rises from July would be enough to stop high price growth.

Inflation is now four times the ECB’s 2% target.

Policymakers may now be more worried by the quick rise in underlying prices, meaning they could be here to stay.

ECB President Christine Lagarde already flagged 25 basis point increases in the ECB’s minus-0.5% deposit rate in July and September.

But some economists fear this will not be enough as underlying inflation shows no sign of calming.

Central bank governors in Austria, the Netherlands and Latvia have all said that a 50 basis point rate hike in July should be on the table.

The ECB is next due to meet on June 9, when it is again expected to signal rate hikes.

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