Core inflation in the euro zone eases slightly in April

Inflation in the euro zone rose slightly in April from 6.9 to 7.0 percent. With this number confirmed the Statistics authority Eurostat their first estimate on Friday. But there is also good news in the detailed payments. Basically, inflation fell slightly. The important core rate of inflation – excluding the often fluctuating prices for energy and food – also fell slightly for the first time in many months from 5.7 to 5.6 percent.

Overall, inflation in Europe remains stubbornly high. The general inflation rate peaked in October at 10.6 percent. The European Central Bank (ECB) is aiming for an inflation rate of two percent.

“If you look at the core data, the momentum in the core goods area has now clearly turned around,” judged the economists from Deutsche Bank Research. All the data points to a turning point. “We expect headline inflation to fall from 7.0 percent to 6.1 percent and core inflation from 5.6 to 5.3 percent in May.”

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In April, the general inflation rate was still largely determined by fluctuating energy prices. The fall in inflation also faltered as energy prices rose 2.5 percent yoy in April after falling yoy in March. Overall inflation in Europe and in Germany is being driven primarily by sharply rising food prices. Services and industrial goods are also becoming significantly more expensive.

There are large disparities in inflation within the euro zone, with a clear east-west divide. Hungary now has the highest inflation rate in the EU at 2.4.5 percent. Latvia follows with 15 percent and the Czech Republic with 14.3 percent. Inflation rates are lowest in small Luxembourg (2.7 percent), Belgium (3.3 percent) and Spain at 3.8 percent. In Germany, the inflation rate in the harmonized European calculation is in the middle at 7.6 percent, but slightly above the average. In France, which had comparatively low inflation rates for a long time, inflation in April was almost the euro zone average at 6.9 percent.

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