2018.05.1620:54:00UTC+00Eurozone Inflation Slowed in April

Eurozone inflation slowed in April, according to European statistics agency Eurostat, confirming an earlier flash estimate and adding to the headache of European Central Bank policy makers seeking to phase out a monetary stimulus package.

Consumer price inflation in the Eurozone has stalled at 1.2 percent in April, down from 1.3 percent in March 2018. Core inflation, which excludes volatile components like food and energy and is seen as a more reliable gauge of inflationary pressures, was down by 0.3 percentage points to 0.7 percent.

The breakdown shows that prices were weighed down by services inflation falling by 0.5pp to 1.0 percent, something which is common around Easter time.

However, according to Claus Vistesen at Pantheon Macroeconomics, the “trend in non-energy goods inflation is oddly weak”. Vistesen said he was hopeful that headline inflation will increase sharply in coming months due to higher oil prices. Falling unemployment should also run parallel with a gradual increase in core inflation.

ECB policy makers are debating whether to end a 2.55 trillion euro ($3 trillion) bond-purchasing scheme, which was set up more than three years ago to push inflation back towards a target of close to but below 2 percent. The target has, however, proved to be an elusive one, as the eurozone economy has showed further signs of slowing growth this year, after steadily emerging from a downturn over the past five years.