Investing.com -- Headline consumer prices in the euro zone ticked slightly higher as anticipated in April, although underlying costs cooled unexpectedly, giving regional rate-setters a mixed picture of inflation as they gear up to unveil their latest rate decision this week.
The currency's area consumer price index for the month rose to 7.0% on an annualized basis, according to preliminary data from Eurostat, in line with economists' forecasts, following a renewed rise in energy prices. However, core inflation, which strips out volatile items like food and fuel, slowed marginally to 5.6%, surprising estimates that the figure would remain unchanged.
In March, inflation in the euro zone fell by the most on record thanks to slipping energy costs, although growth in core prices accelerated to a new high of 5.7%.
The April figures come as the European Central Bank prepares to hold its latest monetary policy meeting on Thursday, with officials widely tipped to raise borrowing costs. However, forecasts differ over whether the ECB will hike rates by 25 basis points or opt for a larger 50 basis point increase.
"Even if headline inflation has come down and will come down further, this is not yet the moment of relief," analysts at ING said in a note. "The ECB doesn’t want to repeat the previous mistake of underestimating inflation and will therefore be willing to go too far, even if this eventually turns out to be a policy mistake."