The April reading of consumer inflation in the eurozone accelerated to 3.0% year on year, compared with 2.6% a month earlier. On a monthly basis, prices rose by 1.0%, with the data coming in line with market expectations. The main factor behind the clear acceleration in inflation was the increase in energy commodity prices, driven by geopolitical tensions in the Middle East.
At the same time, harmonised core inflation, which excludes energy prices and unprocessed food, stood at 2.2% year on year in April. The relatively moderate level of this indicator suggests that inflationary pressure remains largely concentrated in the components most vulnerable to commodity price fluctuations. At this stage, there are no clear signs of inflation spreading broadly across other sectors of the economy.
Nevertheless, consumer inflation remains above the European Central Bank’s medium-term target of 2.0%. As a result, the market has clearly revised its expectations regarding monetary policy in recent months. Just three months ago, the dominant scenario was one of stable interest rates, whereas investors are now pricing in the first interest rate hikes in the eurozone this year.
Source: CEO.com.pl
