2018.05.2821:08:00UTC+00Eurozone Price Growth Seen Picking Up in May

Figures this week are forecast to show euro-area consumer-price growth could have hit its quickest since early 2017 on the back of more expensive oil and a rebound in travel costs.

The cost of crude and a weaker euro are also expected to support a more significant set of numbers out in June -- new ECB forecasts that will help policy makers determine whether the time has come to wind down asset purchases.

Some Governing Council members have signaled their confidence in the inflation path is sufficient to consider ending bond buying this year. An upward revision in forecasts may convince other officials who so far haven't seen enough progress to start discussing an exit strategy.

A survey of economists puts the median estimate for May inflation at 1.6 percent, up from 1.2 percent in April. Some, including Bloomberg Economics, even see it reaching 1.8 percent. Price growth in Germany, France, Italy, Spain is also projected to pick up, largely reflecting external or seasonal effects.

Core inflation is expected to bounce back to one percent, a level it has hovered around for the better part of the past four and a half years.

Oil has surged 20 percent since the ECB produced its March projections, though it fell late last week after Saudi Arabia and Russia announced a new policy to revive output. The euro has lost over five percent against the dollar and some 2 percent in trade weighted terms in the same period.

Florian Hense, an economist at Berenberg, calculates that could add as much as 0.4 percentage point to the ECB's inflation forecasts over the next 12-18 months, although actual revisions for 2018 and 2019 may be smaller. The central bank currently predicts an average rate of 1.4 percent for both years.