Eurozone inflation holds above expectations in April

BSS
Published On: 02 May 2025, 15:37 Updated On:02 May 2025, 16:25

BRUSSELS, Belgium, May 2, 2025 (BSS/AFP) - Inflation in the eurozone remained unchanged at 2.2 percent in April, staying higher than analysts expected despite a faster fall in energy prices, official data showed on Friday.

Core inflation -- which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the European Central Bank -- accelerated more than expected to 2.7 percent in April, after registering 2.4 percent in March, Eurostat data showed.

Analysts for Bloomberg and FactSet had expected headline inflation to slow down to 2.1 percent and core inflation to accelerate to 2.5 percent.

The disappointing figures come after services sector inflation rose by 3.9 percent last month, significantly higher than the 3.5 percent recorded in March.

The ECB closely monitors the sector as it is highly correlated to wage growth, with fears over a vicious cycle between rising wages and increasing prices, making it more difficult to tackle inflation.

ECB Vice President Luis de Guindos, however, expressed confidence on Monday inflation would continue to fall, despite trade tensions linked to US President Donald Trump's hefty tariffs.

Inflation has sharply fallen from the record peak of 10.6 percent in October 2022 after Russia's assault on Ukraine sent energy prices soaring.

With inflation close to the two-percent target, the ECB has shifted to cutting interest rates to boost the eurozone's sluggish economy.

Friday's data showed energy prices sharply fell by 3.5 percent, after a drop of 1.0 percent in March.

Meanwhile, food, alcohol and tobacco price rises accelerated to 3.0 percent in April, slightly up from 2.9 percent in March.

Consumer price rises in Europe's two biggest economies, Germany and France, slowed in April to 2.2 percent and 0.8 percent, respectively.

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