Euro zone inflation accelerates in April on energy, services

FILE PHOTO: A shopper pays with a Euro bank note in a market in Nice
FILE PHOTO: A shopper pays with a euro bank note in a market in Nice, France, April 3, 2019. REUTERS/Eric Gaillard

May 19, 2021

BRUSSELS (Reuters) – Euro zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, the European Union’s statistics office Eurostat said on Wednesday.

Eurostat said consumer prices in the 19 countries sharing the euro rose 0.6% month-on-month for a 1.6% year-on-year increase, up from 1.3% year-on-year in March.

The European Central Bank wants to see inflation even closer to 2% over the medium term but has warned that the faster growth is mainly due to comparison effects with very low energy prices a year earlier.

Prices of energy, such as oil and gas, rose 10.4 year-on-year in April, adding 0.96 percentage point to the final inflation figure. On the other hand, costs of unprocessed food, another volatile component, fell 0.3% year-on-year in April.

Without these two sharply changing factors, or what the ECB calls core inflation, prices went up 0.5% in the month and 0.8% from a year earlier, slowing from the 1.0% annual growth in March.

But prices of services, which account for almost two thirds of euro zone gross domestic product, went up 0.9% year-on-year in April, adding 0.37 percentage point to the final inflation number, continuing a strong trend since the start of the year.

(Reporting by Jan Strupczewski; editing by Philip Blenkinsop)