CORE inflation in the Eurozone shot up in April, it was revealed yesterday, while a senior central bank official signalled more interest rate hikes to come.
Core consumer prices (excluding energy, food, tobacco or alcohol) jumped to 1.6 per cent in the single currency area last month, from 1.3 per cent in March and one per cent in February.
“We are moving from a period of very low interest rates toward a normalisation,” said European Central Bank (ECB) official Ewald Nowotny, before the announcement.
“I think it is problematic to wait too long for this normalisation.”
ECB chief Jean-Claude Trichet declined to use the phrase “strong vigilance” in his last speech on the Eurozone’s monetary stance. The key code-words usually signal an imminent hike in rates, yet senior colleagues have insisted that the omission does not rule out a rise in rates next month.
“If the economy normalises further then the ECB will act accordingly,” Nowotny added, yesterday.
The harmonised measure of consumer prices across the Eurozone rose to 2.8 per cent last month, up from 2.7 per cent in March and 2.4 per cent in February.
The core increase “reflects the late timing of Easter, which meant that package holiday prices were rising strongly at the time,” according to Eoin O’Callaghan of BNP Paribas.
“There will be give back in May as the changing seasonality washes out but it is unlikely to be complete – core inflation is on an upward trend in the euro area,” he added.
Meanwhile, Eurozone exports shot up by a seasonally-adjusted 1.1 per cent in March, bringing the trade gap down to €0.9bn (£0.78bn) for the month, from €2.1bn in February and €3.2bn in the first month of the year.
The raw data, not adjusted for seasonal fluctuations, showed a €2.8bn trade surplus for March – slightly above the trade balance at the same time last year (€2.7bn).
“Nonetheless, imports increased by 6.8 per cent on the whole quarter,” noted Ben May of Capital Economics. “Net trade probably acted as a drag on GDP in the first-quarter of this year.”