In the first quarter of 2026, eurozone GDP contracted for the first time since 2022—by 0.2% year on year, Eurostat reports.
At the same time, S&P Global PMI data point to a sharp increase in price pressure in industry. The input-prices index for the eurozone manufacturing sector rose to 80 points in May—its highest level since May 2022.
It was also the largest monthly increase in companies’ costs in the past 4 years.
Inflation in the Eurozone Exceeded 3%
The producers’ output-prices index rose to 62 points, reaching its highest level in 3.5 years. Since the start of 2026, the pace at which companies raise prices for their output has increased by 12 points, or 24%.
The main driver of the jump was rising prices for energy and raw materials.
Additional pressure on prices is coming from supply-chain delays, which have reached their highest level since the pandemic-era disruption.
As a result, companies are increasingly being forced to pass higher costs on to consumers. This is likely to contribute to a further acceleration of inflation in the coming months.
As Bloomberg notes, on June 11 the ECB is expected to raise interest rates for the first time since September 2023.
We wrote here about how Europe’s economic situation could affect the war in Ukraine.