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Euro Zone Inflation Slows in April

Published 03/05/2018, 10:02
Updated 03/05/2018, 10:04
© Reuters.  Euro zone inflation slows in April

© Reuters. Euro zone inflation slows in April

Investing.com - Inflation in the euro zone slowed in April, according to a flash estimate released on Thursday, underlining the case for the European Central Bank’s caution in removing stimulus measures.

The bloc’s statistics agency Eurostat said its consumer price index fell to 1.2% in April from the same month a year earlier, compared to expectations for a reading of 1.3%.

Core, or underlying inflation, which strips out volatile items such as energy and food, fell to an annual rate of 0.7% from 1.0% in the previous month.

The ECB targets inflation of close to but just under 2%.

Sluggish inflation is one reason some policymakers are cautioning against withdrawing stimulus too soon.

Last week, ECB President Mario Draghi said that his overall assessment was one of “caution tempered by an unchanged confidence” that inflation is moving towards the central bank’s target.

In remarks after the ECB’s policy meeting, Draghi acknowledged that the pace of the recovery in the euro zone had moderated since the start of the year, saying there had been “a loss of momentum that is pretty broad based across countries and all sectors”.

Economic growth in the region slowed to an annualized 2.5% in the first quarter according to preliminary data released on Tuesday, down from 2.7% in the previous quarter.

Many analysts now believe that the ECB may wait until July - a month later than previously expected - to give markets updated forward guidance on its plans to begin phasing out its stimulus program.

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