Harmonized inflation in April increased slightly to 2.2%, compared to April 2023, up from 1.6% in March this year and 3.9% in March ’23, according to Eurostat data.
The inflation uptick occurred while some of the government measures to address the cost of living were still in place.
For instance, horizontal subsidies for motor fuels and heating oil were abolished on April 1st, but partially graduated electricity cost subsidies for invoiced months May – June 2024 and the application of a zero VAT rate on basic items until June 30th, 2024, remained in effect.
In the eurozone, the Consumer Price Index eased to 2.4% annually in March, down from 2.6% in February.
Looking at the main components of inflation in the eurozone, services are expected to have the highest annual rate in April (3.7%, compared to 4% in March), followed by food, alcohol, and tobacco (2.8%, compared to 2.6% in March), non-energy industrial goods (0.9%, compared to 1.1% in March), and energy (-0.6%, compared to -1.8% in March).
Structural inflation slowed to 2.7% from 2.9% the previous month, with these data believed to strengthen arguments for interest rate cuts by the European Central Bank in June.
Practically, the ECB is almost committed to reducing interest rates on June 6th, unless any sudden developments arise, primarily in the realm of wages or prices. The data released by Eurostat generally align with the forecasts announced by the central bank in March.
It is noted that inflation has decreased more rapidly than expected by the ECB over the past year, leading interest rate cuts to dominate the agenda.
The highest inflation rates were recorded in Belgium at 4.9% annually, Croatia at 4.7%, and Austria at 3.4%. In contrast, the lowest rates were observed in Lithuania at 0.4% annually, Finland at 0.6%, and Italy at +1%. German inflation edged up slightly to 2.4% in April, consumer prices in France, the eurozone’s second-largest economy, rose 2.4% in April, and in Spain, the consumer price index increased to 3.4% in April on an annual basis as the government continues to withdraw support measures that absorbed part of the energy cost surge.
