5 May | Euro

European Union inflation holds above central bank's target level

European Union inflation holds above central bank's target level

Bloomberg reports that the eurozone inflation rate remained above the European Central Bank’s (ECB) target in April. 

Eurostat says the consumer price index rose 2.2% year-on-year last month. Economists surveyed by Bloomberg expected inflation to slow to 2.1%. The core index also exceeded analysts' forecasts, coming in at 2.7%. Additionally, price growth in the service sector accelerated in April due to the holidays, yet this effect is set to reverse this month, the news agency notes. 

ECB officials say disruptions in global trade caused by US President Donald Trump's tariff policies will affect prices in the eurozone. Slower GDP growth, cheaper energy, and a stronger euro are expected to tame inflationary pressures. Moreover, Bloomberg Economics estimates that an inflow of Chinese goods to the European Union could reduce prices in the region by 0.5–1.5%.

The German bank KfW forecasts consumer inflation to stabilize near the ECB’s target of 2% in the medium term. According to experts, this will also allow the regulator to cut interest rates at its June meeting.

Elena Dorokhina MarketCheese
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