Eurozone Year-On-Year Inflation Rises Again in April

Eurozone year-on-year inflation rose slightly in April, reaching 7% and ending five consecutive months of declining monthly results, according to Eurostat. The consumer price index had reached 6.9% year-on-year in March. The return to an upward trend could prompt the European Central Bank to raise interest rates at its next meeting. In October last year, Eurozone inflation reached an all-time high of 10.6% after 18 months of continuous increases.

April inflation was driven by the food sector, which saw a strong 13.6% increase (up from 15.5% in March), while the energy sector posted a 2.5% increase in April after a 0.9% decline in March. Major Eurozone economies, such as Germany and France, also saw increases in year-on-year inflation.

This data may influence the ECB’s interest rate decision. While some experts suggest that this is an invitation for the ECB to raise interest rates, others suggest that there could be an aggressive surprise with a 50 basis point increase instead of a 25 basis point increase.