31st May 2023

Eurozone inflation creeps up ahead of ECB rate decision

  • The ECB meeting on Thursday in Frankfurt could result in a quarter- or half-percentage point rise (Photo: Council of the EU)
Listen to article

Annual inflation in the eurozone rose to seven percent in April, according to the EU's statistics agency's data published on Tuesday (2 May), the first increase after a five-month decline.

It is estimated to be up from 6.9 percent in March, according to the estimate of Eurostat, which could decide how big the European Central Bank (ECB) interest rate hike will be on Thursday.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The ECB has raised rates repeatedly since July last year to rein in inflation, and analysts expect the bank to raise it once again — although experts are divided on how big the rise should be.

Following Russia's invasion of Ukraine last year, energy prices soared and pushed consumer prices up, hitting 10.6 percent last October.

Food, alcohol and tobacco are expected to have the highest annual rate in April (13.6 percent, compared with 15.5 percent in March), followed by non-energy industrial goods (6.2 percent, compared with 6.6 percent in March).

Services rose by 5.2 percent, compared with 5.1 percent in March and energy prices were up once again by 2.5 percent, compared with prices falling by 0.9 percent in March.

The slight increase in April in headline consumer prices is likely driven by the increase in energy prices.

However, the eurozone's core inflation, which does not include food and energy prices, fell slightly to 5.6 percent in March from 5.7 percent a month earlier, for the first time in 10 months. It is still far higher than the ECB's target of two percent.

Latvia continues to have the highest inflation at 15 percent, followed by Slovakia, Lithuania and Ireland — all dealing with a double-digit rise in inflation in the 20-member eurozone.

Inflation in Germany, the EU's biggest economy, slipped to 7.6 percent in April from 7.8 percent in March, but in France, consumer prices rose 6.9 percent last month after 6.7 percent in March, Eurostat said.

Italy's central bank chief Ignazio Visco has recently warned against further raising interest rates to tackle inflation, but prominent hawks like Dutch central banker Klaas Knot are pushing the ECB to keep raising rates into the summer.

The ECB's meeting Thursday in Frankfurt could result in a quarter- or half-percentage point boost.

A smaller hike would be a moderation in the bank's policy, while a larger increase would signal that the bank is still concerned about the trend in core inflation.

The US Federal Reserve is also due to decide on its rate on Wednesday.


Squeezing wages is not the answer to inflation

The inflationary "threat" is a favourite bogeyman of conservative and neoliberal economists. For them it's a question of defending savers and wealth and preparing the ground for austerity policies. This vision fails to identify the actual reasons behind price rises.

Hawkish ECB rate-rise 'puts energy transition at risk'

The European Central Bank raised interest rates by another 0.5 percent to a 14-year high, and expects to hike rates by another half percent in March. But what does that mean for the green transition?

US-China economic rivalry leaves EU squeezed, ECB worried

While European Central Bank chief Christine Lagarde warned that increasing rivalry between the US and China will add to inflation and slow growth, top EU officials in the European Parliament insisted on Europe's need to carve out its own place.

EU: Wage-earners will 'bear brunt' of inflation in 2023

The European Commission raised its economic growth forecast but notes that inflation will continue to eat into household income while the contribution of corporate profits to price pressure is expected to remain high in 2023.

EU: national energy price-spike measures should end this year

"If energy prices increase again and support cannot be fully discontinued, targeted policies to support vulnerable households and companies — rather than wide and less effective support policies — will remain crucial," the commission said in its assessment.


EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.

Latest News

  1. Europe's TV union wooing Lavrov for splashy interview
  2. ECB: eurozone home prices could see 'disorderly' fall
  3. Adapting to Southern Europe's 'new normal' — from droughts to floods
  4. Want to stop forced migration from West Africa? Start by banning bottom trawling
  5. Germany unsure if Orbán fit to be 'EU president'
  6. EU Parliament chief given report on MEP abuse 30 weeks before sanction
  7. EU clashes over protection of workers exposed to asbestos
  8. EU to blacklist nine Russians over jailing of dissident

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Join EUobserver

Support quality EU news

Join us