Euro Area: Inflation at two-year high in April on surging energy prices

Euro Area Inflation April 2021

Euro Area: Inflation at two-year high in April on surging energy prices

Harmonized inflation came in at 1.6% in April, following March’s 1.3% and marking the highest print since April 2019. Inflation therefore moved closer to, but remained below, the European Central Bank’s target rate of near, but under, 2.0%. April’s result was due to sharper increases in prices for energy and non-energy industrial goods more than offsetting softer increases in prices for services and for food, alcohol and tobacco.

On a monthly basis, harmonized prices climbed 0.6% in April, following March’s 0.9% increase, which had marked the strongest rise in two years. Core inflation, which excludes volatile energy and unprocessed foods prices, softened to 0.8% from 1.0% in March.

A complete set of data for harmonized inflation will be released on 19 May.

Commenting on the short-term outlook for inflation, Bert Colijn, senior economist at ING, stated:

“Higher goods prices are also imminent as input shortages and supply chain pressures have caused import prices to jump recently. While businesses may absorb part of these higher costs in margins, it does seem logical that prices are set to rise further.”

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