Germany saw inflation rise unexpectedly to 2.4 percent year over year in April, up from 2.3 percent in March, according to Bloomberg. The rebound surprised economists who had expected the pace to stay at 2.3 percent. The agency cited the end of certain state support measures designed to curb energy costs as a contributor to the uptick.
Meanwhile, Spain recorded a 3.4 percent inflation rate after the government rolled back energy subsidies. In contrast, Ireland’s prices advanced more slowly, edging from 1.7 percent to 1.6 percent.
Across the euro area, core inflation—excluding energy and food—was expected to continue easing in April, while the overall rate was seen holding at 2.4 percent, unchanged from March.
Even as inflation retreats from the double-digit highs seen in 2022, the European Central Bank remains cautious about cutting rates promptly, with a June move anticipated but the size and scope of any easing still debated amid uncertainty, according to reports.
Attention from regulators has largely focused on domestic service prices, where wage pressures keep growth robust as households confront higher living costs. The temporary gas tax relief in Germany ended, contributing to the April acceleration in inflation. Analysts foresee the core rate slowing to around 2.9 percent from 3.2 percent in March.
Earlier, the European Commission assessed the damages stemming from the energy crisis across the region, outlining how price pressures and energy dependency have affected economic activity.
Rising input costs in western markets prior to the latest readings are seen as a potential boost to investment and production efficiency, even as businesses navigate higher raw material prices. [citation]