Eurozone Inflation Accelerates As Expected

(RTTNews) - Eurozone inflation rose as estimated in April on higher food and energy prices, while core inflation slowed slightly, final data from Eurostat showed Wednesday.

The harmonized index of consumer prices posted an annual growth of 7.0 percent in April, following a 6.9 percent rise in March. The rate was in line with the preliminary estimate released on May 2.

By contrast, excluding energy, food, alcohol and tobacco prices, core inflation slowed slightly to 5.6 percent from 5.7 percent a month ago. The core rate was also confirmed.

On a monthly basis, the HICP rose 0.6 percent, slightly weaker than the flash estimate of 0.7 percent.

The European Central Bank had raised its benchmark rates by a quarter-point early this month after the release of flash inflation data. Policymakers were of the view that the inflation outlook in the currency bloc remained "too high for too long."

ECB Chief Christine Lagarde also signaled more rate hikes ahead. Nonetheless, the bank slowed the pace of policy tightening from a half-a-point hike in March.

In the EU Spring economic forecast, the European Commission lifted its inflation forecast and cautioned that the slowdown in core inflation will be more gradual than previously estimated. Eurozone inflation was projected at 5.8 percent this year, up from 5.6 percent estimated previously. The forecast for 2024 was raised to 2.8 percent from 2.5 percent.

April inflation was mainly driven higher by food, alcohol and tobacco prices, which climbed 13.5 percent after a 15.5 percent gain in March, data showed today.

Energy prices, the major force behind high inflation over the last year, advanced only 2.4 percent. But this was in contrast to the 0.9 percent drop in March.

The increase in non-energy industrial goods prices slowed to 6.2 percent from 6.6 percent. Meanwhile, reflecting rising wages, services inflation advanced to 5.2 percent 5.1 percent.