Friday 17 May 2019 11:13 am

Eurozone core rate revised up as inflation hits estimates


Reporter covering media, telecoms and marketing. Get in touch at james.warrington@cityam.com

Reporter covering media, telecoms and marketing. Get in touch at james.warrington@cityam.com

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Eurozone prices rose by 1.7 per cent in April, in line with previous forecasts, while core inflation beat expectations.

Consumer prices in the bloc rose 1.7 per cent higher year-on-year from 1.4 per cent in March, according to EU statistics agency Eurostat.

Read more: Eurozone trade surplus grows in sign of recovery for struggling area

The closely-watched core indicator, which excludes volatile energy and food prices, rose to 1.4 per cent in April, beating previous estimates of 1.3 per cent.

The figures will offer some relief to the European Central Bank, which targets inflation of just below two per cent.

The highest contribution to the annual inflation rate came from services, which rose 0.86 percentage points (pp), followed by energy and food, alcohol and tobacco.

“Despite the undoubted role that higher oil prices have played on the headline inflation measure in recent months, the large rise in core inflation also suggests that underlying internal inflationary pressures are building in the euro area,” said Pablo Shah, senior economist at the Centre for Economics and Business Research (Cebr).

Shah said the Cebr forecasted a 1.3 per cent increase in euro area GDP for 2019, down from 1.8 per cent last year.

Read more: EU slashes its forecast for German growth as it predicts Eurozone slowdown

“The projected slowdown means that the European Central Bank is unlikely to engage in monetary tightening any time soon,” he said.


“However, it may well be forced to revisit this stance if core inflation continues to creep up further down the line.”

 

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