No end in sight for European inflation and rate hikes


Prices in the euro area countries rose slightly more strongly in April than in March. This is mainly due to the fact that gas, oil and other energy sources became more expensive again compared to a month earlier. Food prices also continued to rise rapidly.

Inflation for the eurozone in April came to 7.0 percent year-on-year, reports European statistics agency Eurostat based on preliminary figures. In March, everyday life for consumers became an average of 6.9 percent more expensive than a year earlier. The April figure was in line with economists ‘ expectations.

Energy became on average 2.5 percent more expensive, after falling by 0.9 percent in March. Food, alcohol and tobacco rose 13.6 percent in price, after an increase of 15.5 percent a month earlier.

Core inflation, which does not take into account strongly fluctuating prices for energy, food, tobacco and alcohol, came to 5.6 percent according to Eurostat’s initial estimate. That is slightly less than the 5.7 percent in March. It is the first time since June last year that core inflation has declined slightly. Economists had counted on an unchanged figure.

Earlier in the day, it became known that inflation in the Netherlands increased somewhat in April. Daily living was 5.2 percent more expensive in that month than a year earlier, while it was still 4.4 percent in March. According to the European calculation method, Dutch inflation reached 5.9 percent, up from 4.5 percent in March.

The European Central Bank (ECB) has been trying to bring down inflation since last year by raising interest rates, which makes borrowing money more expensive. Central bankers will meet again on Thursday to discuss interest rates. Then it becomes clear whether the slight cooling of core inflation will be enough to raise interest rates by a smaller step of a quarter of a percentage point or whether the ECB is sticking to a firmer increase by half a percentage point.