Euro Area: Harmonized inflation unchanged in April
Latest reading: Harmonized inflation held steady at March’s 2.2% in April. The print came in slightly above market expectations and the ECB’s 2.0% target. Looking at the details of the release, prices for food and services rose at a faster pace. However, prices for energy prices declined at a steeper rate.
The trend was unchanged, with annual average harmonized inflation coming in at March’s 2.3% in April. Meanwhile, core inflation rose to 2.7% in April from the previous month’s 2.4%.
Finally, harmonized consumer prices rose 0.56% in April over the previous month, following the 0.61% increase recorded in March.
Outlook: Our panel sees inflation near current levels in the coming quarters, hovering around the ECB’s 2.0% target, tamed by subdued oil prices.
Panelist insight: Nomura analysts commented on implications for monetary policy:
“We think the ECB will look through April HICP inflation data. Although the acceleration in services price momentum could to some extent be concerning, the April inflation data do not incorporate any effects from tariffs. We believe the ECB will instead continue to focus on the US tariff shock, which threatens to be a material drag on euro area GDP growth.”