Despite a quicker decline in energy prices, the eurozone’s inflation rate stayed higher than predictions in April, sticking at 2.2 percent, according to official statistics released Friday.
According to Eurostat data, core inflation, which excludes volatile prices for food, energy, alcohol, and tobacco and is a crucial metric for the European Central Bank, increased more quickly than anticipated to 2.7 percent in April from 2.4 percent in March.
Analysts for Bloomberg and FactSet had predicted headline inflation to drop down to 2.1 percent and core inflation to increase to 2.5 percent.
The dismal numbers follow a 3.9 percent increase in services sector inflation last month, which was far higher than the 3.5 percent increase in March.
Because of its strong correlation with wage growth and concerns about a vicious cycle of growing salaries and rising prices that would make it more challenging to combat inflation, the ECB keeps a careful eye on the industry.
However, despite trade tensions brought on by US President Donald Trump’s high tariffs, ECB Vice President Luis de Guindos said Monday he was confident inflation will continue to decline.
Since Russia’s attack on Ukraine caused energy costs to skyrocket, inflation has drastically decreased from its record high of 10.6 percent in October 2022.
With inflation close to the two-percent target, the ECB has shifted to cutting interest rates to boost the eurozone’s sluggish economy.
According to figures released Friday, energy prices plummeted by 3.5 percent following a 1.0 percent decline in March.
In the meantime, price increases for food, alcohol, and tobacco increased to 3.0 percent in April, a modest increase from 2.9 percent in March.
In April, consumer price increases in France and Germany, the two largest economies in Europe, decreased to 0.8 percent and 2.2 percent, respectively.
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