Eurozone inflation rises

More expensive energy drove eurozone headline inflation higher in April and core inflation jumped as well, data showed, confirming an earlier estimate and the ECB's concern about rising inflationary risks.

The European Union's statistics office Eurostat said consumer prices in the 17 countries using the euro rose 0.6 per cent month-on-month, confirming its earlier year-on-year estimate of a 2.8 per cent rise, up from 2.7 per cent in March.

Eurostat said fuels for transport added 0.56 percentage point to the overall annual inflation gain, heating oil added another 0.21, electricity 0.12 and gas 0.09.

Food alcohol and tobacco prices rose 0.2 per cent on the month and 2.2 per cent year-on-year.

Without volatile energy and unprocessed food costs, of what the European Central Bank calls core inflation, prices rose 0.5 per cent month-on-month for a 1.8 per cent year-on-year gain.

This is up from 1.5 percent year-on-year in March and 1.1 per cent in February.

The ECB raised interest rates in April to 1.25 percent from 1.0 percent citing rising inflationary pressures and economists expect the bank could raise borrowing costs twice more this year, with the next hike most likely in July.

The ECB wants to keep inflation below, but close to two per cent over the medium term.

Separately, Eurostat said the euro zone had a bigger than expected external trade surplus of 2.8 billion euros in March against market expectations of a £1.5bn, even though exports rose 16 percent year-on-year and imports increased 17 per cent.

Adjusted for seasonal swings however, the trade balance was a 900m euro deficit, Eurostat said, with exports rising 1.1 per cent month-on-month and imports increasing 0.3 per cent month-on-month.