"Inflation in the eurozone reached an annual 8.1% in May, underlining the growing cost to households of US sanctions on Russia and of the sanctions European governments have imposed.
The data from the European Union's statistics agency marked a sharp acceleration from the 7.4% rate of inflation recorded in both April and March.
Consumer prices rose at the fastest pace since records began at the start of 1997.
Germany's statistics agency said inflation in the eurozone's largest member hadn't been this high since late 1973 and early 1974, amid a severe shortage of oil.
The data came as the EU adopted a partial embargo on Russian crude- and refined-oil products, which could give energy prices -- a main culprit in the inflation jump -- a fresh boost.
Despite the agreement, some analysts say the economic fallout from the war has begun to gnaw at European unity against Moscow.
Energy prices in May were 39.2% higher than a year earlier. Food prices also rose at a faster pace, as did prices of manufactured goods and services.
Russia is a major supplier of energy to Europe.
Those price rises have been driven in part by the EU's declared aim of reducing its reliance on Russia's fossil fuels to deprive the country of the funds.
The EU's adoption late Monday of curbs to Russian oil exports came despite concerns, shared by the U.S., that public support for sanctions could weaken if energy bills continue to swell.
Crude prices rallied following news of the EU's agreement, with futures for Brent crude, the global benchmark, up 1.6% to $119.52 a barrel.
"More than ever, it is important to show that we are able to be strong, we are able to be firm and we are able to be tough to defend our values and to defend our interests," said European Council President Charles Michel, announcing the deal.
The sanctions will likely keep energy prices higher for longer than would otherwise have been the case, increasing the risk of the eurozone sliding into recession.
Economists at Rabobank said they expect the economy to shrink toward the end of 2022, given the extent of the planned oil sanctions.
"This is not a paper tiger," they said. "It also strengthens our view that the eurozone economy will feel the impact of this embargo sooner or later."
Throughout 2021, household energy prices rose faster in the U.S. than in Europe, helping to keep the overall inflation rate higher. However, the situation reversed in January.
The U.S. has yet to release a May inflation figure, but its annual rate eased in April to 8.3% from 8.5% in March.
There are signs that eurozone workers are securing larger pay raises than they have for more than a decade, but the increases lag far behind the rate of inflation.
As a result, households will have less to spend on goods and services produced inside the currency area, while manufacturers are facing sharply high costs.
The European Commission expects real wages to fall by 2.2% across the eurozone this year.
In France, where widespread use of nuclear power has kept energy prices in check, real wages are seen falling by just 0.2%.
But in Germany, which relies heavily on Russian natural gas, real wages are expected to fall by 2.7%.
With inflation hitting records, the European Central Bank has said it will end its bond-buying program in July, and raise its key interest rate to zero by September, from minus 0.5% now.
The pace of price increases has led to speculation that the ECB might accomplish that in one move of half a percentage point in July, following the Federal Reserve's May precedent.
However, ECB chief economist Philip Lane has said two moves of a quarter-of-a-percentage point each is much more likely.
"Normalization has a natural focus on moving in units of 25 basis points," Mr. Lane told Spanish daily El Pais in an interview published on Monday." [1]
1. World News: Eurozone Inflation Hit a Record in May --- Rise to 8.1% reflects impact on region's households of Russia sanctions
Hannon, Paul.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 01 June 2022: A.18.
