Inflation picked up slightly in the Eurozone in April (7%), putting an end to a downward path that had accumulated five months of falls. The provisional data published this Tuesday by the European Statistical Office (Eurostat) show a rise in prices of 0.1 points compared to March. In the case of Spain, prices climbed to 3.8%, 0.5% more than in the previous month. The end of the price falls could mark the next decisions of the European Central Bank (ECB), whose governing council meets this Thursday in Frankfurt.
The European bank’s strategy, which has applied rate hikes since July of last year to contain the inflationary spiral, seems to be working. Prices have been substantially contained since then, but remain more persistent than expected. In April, the rise in energy costs –which registered a year-on-year rise of 2.5%– again inflated prices. The positive note: food took a breather and fell 4 points, to stand at 10%. The underlying rate, which is of particular concern to experts, has also been contained at 5.6%, giving its first sign of moderation in nine months.
Among the States of the common currency, Luxembourg (2.7%), Belgium (3.3%) and Spain (3.8%). recorded the lowest prices. By contrast, inflation remained persistent in the Baltics, led by Latvia (15%), closely followed by Slovakia (14%).
The chief economist of the ECB, Phillips Lane, advanced last week that at this week’s meeting the body will approve a new rate hike. “The current data suggests that we need to bring them back up,” he said. The slight improvement in core inflation in April will also serve as an incentive for the Eurobank to continue tightening its monetary policy to bring prices below 2% over the medium term.
The debate will focus, instead, on the rate at which the ECB should continue to make money more expensive, whose value is now at 3.5%. The recent financial instabilities due to the intervention of the US bank Silicon Valley Bank and the bailout of the Swiss entity Credit Suisse have fueled the discussion about a possible moderation in interest rate rises, going from 50 basis points to 25, for fear of new turbulence in the European banking system.
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