Inflation across the euro area is forecast to have risen to 7.5% in April, according to the latest “flash” estimate from the EU statistics service Eurostat.
This compares with a rate of 7.4% in March.
Energy inflation, which still accounts for about half of all inflation, increased by 38% annually. However, this is a decrease of 3.7% on the rate registered in March.
Food and alcohol prices increased further at an annual rate of 6.4%, compared to 5% in March.
Unprocessed foods rose at an annual rate of 9.2%, up from a 7.8% rate in March, today’s figures show.
Inflation in Ireland is forecast to have risen from 6.9% in March to 7.3% in April, the CSO said today.
Commenting on the data released today, Colin Cotter, a CSO statistician, said that looking at the flash HICP components in Ireland for this month, energy is estimated to be down 1.7% on the month and up 39%. .1% from April 2021. .
“There was a similar result for the euro zone in general, with energy prices falling 3.7% in the month and rising 38.0% on an annual basis,” it added.
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Today’s numbers make uncomfortable reading for European Central Bank policymakers, who are already worried that rapid price growth could take hold, creating a spiral of wages and prices that is difficult to break.
Core prices, which filter out volatile energy and food prices, also rose.
This will add to ECB concerns that high inflation may prove difficult to overcome and that a nearly decade-long struggle against ultra-low price growth is over.
Inflation excluding food and fuel prices, closely watched by the ECB, rose from 3.2% to 3.9%, while a narrower measure that also excludes alcohol and tobacco products jumped from 2.9% to 3.5%.
Both figures were well above expectations.
— EU_Eurostat (@EU_Eurostat) April 29, 2022
Struggling to rein in price growth, the ECB is almost certain to cut support for the economy further when lawmakers meet on June 9, even if the war weighs on confidence and risks pushing growth to negative territory this quarter.
It will first end bond purchases, probably in July, and then consider a rate hike sometime in the third quarter with a second rate move expected before the year is out.
The big concern of the ECB authorities is that long-term inflation expectations are rising well above their 2% target, signaling diminished confidence in their ability to control prices and, ultimately, fulfill its mandate.
A key gauge of long-term inflation expectations rose to 2.5%, but even some survey-based indicators are now showing readings above 2%.
Markets are currently pricing in 90 basis points of rate hikes this year or three to four hikes, which would put the ECB’s -0.5% deposit rate back into positive territory for the first time since 2014.
Meanwhile, the Minister for the Environment, Climate Action and Communications has said there are no plans for any further relief for households to help deal with higher energy prices.
Eamon Ryan said any additional support will be delivered in the context of the budget in October.
He was speaking at the launch of the world’s first large-scale grid-connected terrestrial solar farm located near Ashford in Co Wicklow.
The Minister said that developing renewable energy sources was the best way to protect consumers in Ireland from rising energy prices.
Additional reporting by Reuters and George Lee