Eurozone inflation misses forecasts in April

Consumer prices in the Eurozone fell more than expected in April, according to data released by Eurostat.

Prices declined 0.2% on the year, having been steady in March. This was a bigger drop than the 0.1% forecast by economists, with energy prices proving to be the biggest drag as they slid 8.6% on the year.

Core inflation, meanwhile, rose 0.8%, missing expectations for a 1% increase.

“Underlying inflation continues to run away from the ECB’s base line rate of 2%,” said Michael Hewson, chief market analyst at CMC Markets.

“Drilling down into the detail it’s not hard to see where most of that decline came from, with sharp declines in energy prices contributing to all of the decline. Given the surprise jump in the Eurozone Q1 GDP numbers it would seem that energy prices and not negative interest rates are acting as a fiscal stimulus and helping to support the recovery in the European GDP numbers.”