Buy buyers on April 19, 2025 fresh vegetables, fruit and herbs on an outdoor product under green streaked roofs in Regensburg, Upper Palatinate, Bavaria, Germany.
Michael Nguyen/Nurphoto about Getty Images
In April, inflation of the euro zone was 2.2% unchanged, which had the expectations for a move lower, as Flash data from the Statistics Authority showed Eurostat on Friday.
Economists surveyed from Reuters had expected the reading in April at 2.1% compared to 2.2% in March, since inflation had returned to the 2% goal of the European Central Bank.
The core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, was accelerated to 2.7% compared to 2.4% in March. The inflation pressure with closely respected services has also taken up again and reached 3.9% compared to the previous reading of 3.5%.
The euro was higher after the data was published compared to the US dollar and the British pound. The income yields hardly changed, with the return on 10-year-old German bonds continued to act higher by 3 basis points.
The increase in inflation of the services was probably “mainly driven by Easter -timing effects,” said Franziska Palma, Senior Europe Economist at Capital Economics. These effects would reverse in the coming month, she added that this left the door open for further interest reductions from the European Central Bank.
“We believe that the service rate will drop considerably in the rest of this year, since the US tariffs weigh the activities and the labor market continues to weaken,” added Palmas.
Michael Field, Chief Equity Strategist at Morningstar, urged caution in the meantime and said the uncertainty of the tariff means “any comfort we have here is precarious.” Another escalation of the tariff voltages would mean an inflation in Europe, he said.
The field added that further ECB installment cuts were still on the table. “This relatively low heading inflation keeps the pressure from the ECB, which in turn can lower interest rates,” he said.
ECB President Christine Lagarde announced CNBC last week that “we are heading for ours [inflation] Goal in the course of 2025, so that the disinflationary process is so on the right way that we are located shortly before completion. “
Last week, Lagarde and other political decision-makers warned that the picture for inflation was less clear, with factors such as potential countermeasures against US tariffs and fiscal changes such as the main infrastructure package in Germany.
Lagarde said that the ECB would be “data dependent on the extreme” if interest decisions were made. The central bank last reduced interest rates in the last month and reduced 2.25% of its Kenzintsen deposit system, 4% in mid-2023.
Several large economies of the euro zone had already published their latest inflation figures a week, which are harmonized for comparability in the entire block. The German statistics office gave on Wednesday that consumer prices rose by 2.2% in April, but somewhat higher than expected under the reading of the previous month. In the meantime, the harmonized inflation was 0.8%, also slightly before expectations.
The data published at the beginning of this week showed that the Economy Econo economy could increase steam, whereby the Bloc's gross domestic product rose by 0.4% in the first quarter of 2025, as can be seen from a preliminary reading. This was higher than the forecast of 0.2% and followed a revised growth pressure of 0.2% in the last quarter of 2024.
However, the growth will be expected in the coming months due to the global tariff case.
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