Link Securities | Eurostat published on Tuesday that, according to the preliminary estimate of the data, the Eurozone consumer price index (CPI) rose 0.7% in the month of April compared to March. In the year-on-year rate, the Eurozone CPI rose in April, also according to the preliminary reading of the index, by 7.0% compared to 6.9% in March, which was expected by the analysts’ consensus.
In April energy prices rose by 2.5% (-0.9% in March) and services prices by 5.2% (5.1% in March). On the other hand, the year-on-year growth rate of food, alcohol and tobacco prices fell slightly to 13.6% (15.5% in March) and that of non-energy industrial goods to 6.2% (6.6% in March).
In turn, the underlying CPI, which excludes unprocessed food, alcohol, tobacco and energy prices, rebounded year-on-year to 5.6%, slightly below the 5.7% in March, which was expected by analysts.
Assessment: despite the slight decline in core inflation in April, prices are still not evolving as we believe the ECB would like them to. This is why we believe that the Eurozone’s central bank will continue with its rate hike process in the coming months, and it is unlikely that, barring unexpected surprises, it will change its roadmap. To start with, we expect that it will raise its benchmark interest rates this Thursday, all of them by a quarter point, and that in its speech it will reiterate that its next moves will be conditional on the data that is published.