Monday 16 December 2019

Euro zone April inflation rises less than expected

Mario Draghi, President of the European Central Bank
Mario Draghi, President of the European Central Bank

Euro zone inflation nudged above 2009 lows in April but fell short of economists' predictions despite increased spending at Easter, leaving the threat of deflation hanging over the European Central Bank.

Annual consumer inflation in the 18 countries sharing the euro was 0.7 percent in April, climbing from March's 0.5 percent, which was the lowest since late 2009, the EU's statistics office Eurostat said on Wednesday.

Economists polled by Reuters predicted 0.8 percent in April. But both figures are still within the ECB's danger zone of below 1 percent, reflecting the poor state of the economy after a long recession and with unemployment at near-record levels.

April's reading takes inflation back to where it was in February but it is well below 1.2 percent of April 2013. It also leaves the ECB in a difficult position when it holds its next policy meeting on May 8 because of lack of a clear up-tick in consumer prices.

While April improved because of a smaller fall in energy prices, the pace of price rises in food, alcohol and tobacco was lower than the month before, meaning Europeans are unwilling to spend while economic growth remains so fragile.

Online Editors

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