Euro area annual headline inflation was unchanged in April at 2.4 per cent while underlying inflation (headline excluding energy, food, alcohol and tobacco) fell 0.3 percentage points to 2.7 per cent, the lowest recorded figure since January 2022. Compared with March, headline prices rose 0.6 per cent, slightly more than the historical average for this month, driven by higher-than-normal rises in the price of services.
The inflation print was broadly in line with the European Central Bank’s March projections (which see both measures of inflation returning to the two per cent target around the middle of next year). Fathom’s Global Outlook, Spring 2024 sees the path of EA inflation tracking somewhat lower than the ECB expects, driven by muted consumption. Wage developments appear to support this path, having declined somewhat from February to March, according to the wage tracker from the employment agency Indeed. Other factors, such as rising oil prices and a stronger dollar pull in the opposite direction.
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