Euro Area Inflation

Inflation rises in April from March

Latest reading: Harmonized consumer prices increased 3.1% in annual terms in April, following a 2.6% rise in the prior month. April's reading was the strongest since September 2023, in line with expectations and exceeded the ECB’s 2.0% target. Energy prices surged at the sharpest pace since February 2023, with the closure of the Strait of Hormuz constricting supply. Relative to the previous month's data, there were higher price pressures for food, alcohol and tobacco (+2.5% in annual terms vs +2.4% in March), energy prices (+10.9% vs +5.1% in March) and non-energy industrial goods (+0.8% vs +0.5% in March). In contrast, price pressures reduced for services in April (+3.0% vs +3.2% in March). Meanwhile, core consumer prices rose 2.2% on a year-on-year basis in April, following a 2.3% increase in the prior month. Lastly, harmonized consumer prices increased 1.04% in April in month-on-month terms, following a 1.27% increase in the previous month.

Outlook: Since the Iran war broke out, our panelists have raised by nearly a percentage point their forecasts for inflation in Q2, Q3 and Q4 and the first quarter of next year. Inflation is now seen peaking at a nearly three-year high in Q2–Q4, before returning to near the ECB’s target in Q2 2027.

Panelist insight: ING’s Peter Vanden Houte said: “Even though ECB President Christine Lagarde doesn’t like the word, the eurozone is facing a stagflation-like environment, albeit still mild at this stage. Inflation expectations are picking up: the three-year-ahead consumer inflation expectation climbed to 3% in March from 2.5% in February […]. The bottom line is that a rate hike in June is very likely and that a second one in September cannot be ruled out. That said, three rate hikes this year still seems a bridge too far to us.” Nomura analysts commented: “We expect indirect inflation effects to become more pronounced over the coming months, a view supported by [the April] European Commission survey that indicates firms intend to raise core goods prices and services prices over the coming months.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects European inflation projections for the next ten years from a panel of 70 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for European inflation.

Download one of our sample reports to visualize what a Consensus Forecast is and see our European inflation projections.

Want to get access to the full dataset of European inflation forecasts? Send an email to info@focus-economics.com.