Eurozone inflation rate in April beats forecasts

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Euro zone inflation surged beyond expectations during the month of April, bring slight relief for the European Central Bank (ECB).

Much of the surge was likely related to seasonal effects due to the timing of Easter.

Inflation in the 19 countries sharing the euro accelerated to 1.7 percent in April from 1.4 percent a month ago, beating expectations for 1.6 percent, Eurostat data showed on Friday.

More crucially, underlying prices excluding food and energy, a figure closely watched by the ECB, picked up to 1.3 percent from 1 percent, erasing a worrisome dip a month earlier and hitting its highest rate since October on a jump in services costs.

The ECB targets inflation just below 2 percent but has undershot this for the past six years even as it deployed an arsenal of conventional and unconventional tools to boost growth and prices.

But any relief from solid April figures is likely to be short lived as the ECB expects inflation to slowly sink this year and not hit its target over the next three years.

The ECB is expecting interest rates to stay steady through the year but risks are skewed towards an even later lift-off as markets price no hike for the better part of the next two years.

Via Reuters