Categories: Finance

Euro zone inflation accelerates in April on energy, services

The European Union’s statistics office Eurostat said that the Euro zone inflation accelerated as expected in April. This is because of a sharp rise in the costs of energy and services.

The consumer prices in the 19 countries sharing the euro rose 0.6% month-on-month for a 1.6% year-on-year increase, up from 1.3% year-on-year in March said Eurostat. Over the medium term the European Central Bank wants to see inflation even closer to 2%. But it has warned that the faster growth is mainly due to comparison effects with very low energy prices a year earlier.

Prices of energy, such as oil and gas, rose 10.4 year-on-year in April. This adds 0.96 percentage point to the final inflation figure. On the other hand, costs of unprocessed food, another volatile component, fell 0.3% year-on-year in April. Prices went up 0.5% in the month and 0.8% from a year earlier, without these two sharply changing factors, or what the ECB calls core inflation. This is slowing from the 1.0% annual growth in March.

But prices of services, which account for almost two thirds of euro zone gross domestic product, went up 0.9% year-on-year in April. This adds 0.37 percentage point to the final inflation number. And thus the strong trend continues since the start of the year.

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