In April, inflation in the 20 European countries using the euro currency increased to 7%, putting more pressure on households and prompting the European Central Bank (ECB) to consider another significant interest rate hike. According to Eurostat, the European Union statistics agency, this marks an increase from the previous month’s annual rate of 6.9%. However, food prices decreased slightly from March’s 15.5% to 13.6% in April, while energy prices rose by a more modest 2.5%.
Despite core inflation, which excludes volatile food and fuel, slightly slowing to 5.6%, it remains high, indicating that the ECB is likely to proceed with its campaign to curb inflation with rate hikes. The ECB’s meeting in Frankfurt on Thursday could lead to an increase of either a quarter- or a half-percentage point. Analysts believe that a quarter-point hike would be a moderation in the bank’s rapid increases, while a half-point increase would emphasize the need to address inflation, which is still not heading back towards the bank’s target of two per cent.
In conclusion, as inflation rises to 7% in the euro zone, the ECB is under pressure to take further action to contain it. The decrease in food prices, along with the modest increase in energy prices, provides some relief, but core inflation is still high, requiring the ECB to continue its campaign to curb it. The ECB’s meeting on Thursday could result in an interest rate hike, with analysts predicting either a quarter- or a half-percentage point increase.
SOURCE: Ref-euronews
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