Annual inflation in the eurozone returned to growth in April after five straight months of decline, but core (core) inflation unexpectedly fell, Reuters reported, citing Agerpres.

Eurostat annual inflation rose to 7% in April 2023 from 6.9% in March, according to a preliminary estimate published by Eurostat on Tuesday.

The figure, announced by Eurostat, slightly exceeds the estimates of analysts, who expected inflation to stagnate at the level of 6.9%.

On the other hand, Eurostat data showed that core inflation, the inflation that remains after the prices of volatile goods such as energy and food, unexpectedly fell to 7.3% in April from 7.5% in March.

Core inflation is a measure that the ECB monitors closely when developing its monetary policy decisions. Similarly, another gauge, which in addition to energy and food prices also excludes cigarette and alcohol prices, also fell to 5.6% from 5.7% in March.

This is good news for the ECB as food, alcohol and cigarette prices rose by 13.6%, a significant slowdown from the 15.5% increase in March, suggesting that the long-awaited fall in food prices , seems to have finally happened.

Good news on inflation and concerns about the cost of borrowing

All these data should prompt the European Central Bank (ECB) to decide on a new increase in reference interest rates on Thursday.

But some ECB officials, including Bank of France Governor Francois Villeroy de Gaulle, pleaded for a more modest rate hike at this month’s meeting on the grounds that the ECB had raised the cost of borrowing enough to constrain the economy. activity.

The Frankfurt-based institution has raised interest rates by at least 50 basis points at each of the last six monetary policy meetings.

The ECB’s interest rate hike automatically raises the cost of borrowing for companies and governments and raises concerns that the fight against inflation will hurt economic growth.