BRUSSELS (Reuters) – Euro zone inflation rose by more than expected to the European Central Bank’s target and core inflation increased to its highest level in more than three years, according to the first estimates from the EU’s statistics agency.
Inflation in the 19 countries sharing the euro was 1.9 percent year-on-year, Eurostat estimated, up from 1.5 percent in March and just short of the four-year high of 2.0 percent recorded in February.
Economists polled by Reuters had forecast April annualized inflation at 1.8 percent, but estimates released on Thursday showing sharper-than-expected price hikes in Germany had prepared markets for a potential stronger figure for the bloc.
The ECB has a medium-term target for inflation at close to but just below 2 percent.
Core inflation, which excludes volatile prices of energy and unprocessed food and which the European Central Bank monitors closely, also rose to 1.2 percent year-on-year in April from 0.8 percent in March, above market expectations of 1.0 percent.
The core level was at its highest level since September 2013.
The estimated figures for April could increase pressure on the ECB to wind down its monetary stimulus. The central bank has slashed interest rates into negative territory and adopted a bond-buying program worth 2.3 trillion euros ($2.5 trillion) to counter the threat of deflation and revive growth in the 19-member currency bloc.
The ECB on Thursday stuck to its ultra-easy policy stance, but explicitly acknowledged the vigor of the euro zone economy, now on its best run since the global financial crisis.
Overall inflation was higher primarily because of a 7.5 percent rise in energy prices and of 2.2 percent for unprocessed food.
Prices for food, alcohol and tobacco went up by 1.5 percent in April, actually lower than the 1.8 percent figure for March.
In the services sector, the largest in the euro zone economy, prices rose by 1.8 percent in April, compared with 1.0 percent in March.
Eurostat’s flash estimate for the month does not include a monthly calculation.
(Reporting By Philip Blenkinsop)