Eurozone inflation remained stubbornly elevated in April, with prices rising at an annual rate of 2.2% as surging services sector costs counteracted sharp declines in energy prices, according to Politico.
Month-on-month consumer prices climbed 0.6%, driven by a 1.4% annual rise in services costs, which neutralised a 3.8% drop in energy prices linked to tumbling oil markets, data published by Eurostat on Friday revealed.
The figures defied analyst expectations of a dip to 2.1%, underscoring persistent underlying price pressures despite weaker global demand triggered by US President Donald Trump’s tariffs. While ECB policymakers maintain inflation will ease to 2% by year-end, buoyed by a 10%-euro appreciation against the dollar this year, the stagnation highlights risks of a prolonged “last mile” to target.
Separate S&P Global surveys revealed the eurozone’s manufacturing sector contracted in April, albeit at the slowest pace since mid-2022. Hamburg Commercial Bank’s Cyrus de la Rubia cautioned the sector “remains fragile,” citing threats from Chinese exporters diverting goods to Europe amid US trade barriers.
April’s data underscores the eurozone’s uneven economic landscape. While southern economies like Spain and Portugal benefit from tourism-driven services growth, industrial powerhouses Germany and France grapple with slumping factory output.
