Financial News: Eurozone Inflation Remains Stable At 2.2%

Eurozone Inflation Remains Stable At 2.2%

(RTTNews) - Euro area annual inflation remained stable in April near the European Central Bank's 2 percent target, but the trade tariff uncertainty clouds the outlook.

The harmonized index of consumer prices grew 2.2 percent on a yearly basis in April, the same pace of increase as seen in March, flash data from Eurostat showed on Friday. Prices were expected to climb at a slower pace of 2.1 percent.

Core inflation that excludes prices of energy, food, alcohol and tobacco increased more-than-expected to 2.7 percent from 2.4 percent in the previous month. Economists had forecast a rise of 2.5 percent.

Within the main components, services showed the highest annual increase of 3.9 percent. This was followed by a 3.0 percent rise in food, alcohol and tobacco prices. At the same time, non-energy industrial goods prices posted a steady increase of 0.6 percent.

Meanwhile, the decline in energy prices worsened to 3.5 percent from 1.0 percent in the previous month.

On a monthly basis, the HICP moved up 0.6 percent, data showed. April's rise in services inflation is unlikely to worry the ECB too much as it was probably driven mainly by Easter timing effects, Capital Economics economist Franziska Palmas said.

Services inflation will likely start falling again in the coming months and that U.S. tariffs will prove disinflationary for the euro-zone, paving the way for two more rate cuts this year, the economist added.

ING economist Bert Colijn said inflation is on track towards the ECB's target, which justifies a continued careful easing of the monetary policy stance.

Colijn noted that disinflationary pressures are likely to prevail in the short term but medium-term inflation developments are clouded in huge uncertainty.

Official data today showed that the unemployment rate in the currency bloc remained unchanged at 6.2 percent in March. Compared to February, unemployment increased by 83,000.

The youth jobless rate dropped marginally to 14.2 percent from 14.3 percent in March.

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