Eurozone price pressures surpassed expectations in April, posing new challenges to excavation trends and potentially complicate the European Central Bank (ECB) roadmap further down in the coming months, Euroneuz reported.
Consumer prices rose 2.2% year-on-year, unchanged since March, but slightly surpassed the 2.1% forecast by economists, according to preliminary figures released by Eurostat on Friday.
Each month, inflation accelerated by 0.6% as of March, suggesting that developmental momentum may be stagnating.
More worrying for Frankfurt policymakers, core inflation, which excludes volatile food and energy prices, rose to 2.7% in April, well above the consensus estimate of 2.5%, from the previous month’s 2.4%. This was the first increase in core inflation since May 2024, and services were once again leading fees. Services Inflation is a central indicator in the assessment of the underlying price pressures of the ECB, rising sharply from 3.5% in March to 3.9% per year. Each month, service prices rose 0.9%.
Inflation remained very uneven throughout the Euro area. Estonia recorded its highest annual inflation rate at 4.4%, followed by the Netherlands and Latvia at 4.1%. In France, annual inflation rates were only 0.8%, resulting in lower price growth.
Despite strong inflation printing than expected, financial markets remained largely uninterrupted. Investors appeared to remain confident that the ECB would push for rate cuts in June. The market primarily interprets April data as temporary bumps rather than trend changes. Germany’s two-year Schatz yields, often considered a barometer of ECB policy expectations, remained stable at 1.73%, while the 10-year residual yield remained unchanged at 2.46%.
The euro also messed up the data and retained its previous profit against the dollar at 1.1330. Meanwhile, the stock market expanded its rallies, supported by corporate profits and investor optimism. The EuroStoxx 50 index rose 0.8% on Friday, while Germany’s DAX rose 1.8% for its eighth day straight profit. The defence powerhouse Rheinmetall AG has raised Dax and jumped to 3.6%, reaching a new record level amid ongoing demand for military equipment. Within the broader EuroStoxx 50, ING Groep, Airbus and Bayer were top performers, up 5.2%, 5.1% and 4.2% respectively.
On the downside, Munich RE and Energy Group RWE lost 4.9% and 3.6%. Eurozone banks have also acquired positions, with the EuroStoxx Bank Index rising 1.9%, reflecting the sentiment of resilient investors amid a potentially long-term, restrictive policy.
MNA/