In April, Eurozone inflation held steady at 2.2%, but this figure conceals significant shifts in underlying price dynamics. While energy prices showed stronger deflation, both core and services inflation measures saw acceleration, hinting at rising domestic price pressures that could pose upside risks to inflation overall. Amid continuing uncertainty affecting growth in the Eurozone, market expectations suggest that the European Central Bank (ECB) will likely continue to cut interest rates for the remainder of the year to stimulate economic activity.
Eurozone inflation for April remained steady at 2.2%, with unchanged rates hiding significant underlying changes in energy and core services prices.
The core and services measures of inflation have accelerated, indicating stronger domestic price pressures that could lead to upside inflation risks.
Despite the stable headline inflation, the European Central Bank faces uncertainty in growth and will likely continue cutting rates throughout the year.
The stronger deflation in energy prices contrasts with increasing core inflation, which may challenge ECB's approach to managing the economy.
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