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Bert Colijn, senior economist at ING, explains that for the Eurozone, inflation came out at 1.7% in April with Easter and oil effects likely to have pushed up the data, but the trend is still downwards.

Key Quotes

“Inflation data usually bounces around this time of the year, as the timing of Easter influences holiday related price growth. This year is no different as March saw a drop in core inflation from 1 to 0.8% and it went up to 1.2% in April. The differences in services inflation, which include package holidays were even more pronounced as they jumped from 1.1 to 1.9% in April. Core inflation improvements are likely to reverse again next month as Easter effects fade out.”

“The recent rise in oil prices is pushing up inflation now, but base effects from energy prices are still going to push inflation down over the coming months with headline inflation moving further away from the ECB’s target until the end of 2020.”

“The ECB is unlikely to bat an eyelid towards March and April fluctuations, but may still be confused by the recent signals about growth and inflation. The Q1 growth figures were surprisingly strong, but recent surveys indicate new orders continue to come in weak.”