MNI: Euro Area Inflation Dips in April; Core Downside Surprise

--EMU Flash April HICP +1.2% y/y vs March +1.3% y/y

By Jamie Satchithanantham

     LONDON (MNI) - Euro area inflation surprised to the downside in April, with

core inflation falling by much more than market expectations, according to flash

data published by Eurostat Thursday.

     Preliminary estimates placed eurozone inflation at 1.2% in April, down from

1.3% in March and below the market consensus of a 1.3% outcome.  

     --LOWER SERVICES INFLATION OFFSETS FOOD, ENERGY 

     Despite support from food, alcohol and tobacco and energy, both components

up 2.5% y/y in April, Euro area inflation was pressured lower by weaker services

inflation. Services prices were up an estimated 1.0% y/y in April, down from

1.5% in March.

     --POSSIBLE EASTER DRAG ON CORE    

     Core inflation, which strips out the prices effects from food, alcohol,

tobacco and energy, also receded on the month, falling sharply to 0.7% y/y from

1.0% in March.   

     Ahead of the release, analysts were near unanimous in expecting lower core

services inflation to drag on the overall core measure, stemming from an Easter

effect.

     Easter Sunday fell earlier in the year in 2018 (April 1) versus last year

(April 16) and the subsequent base effect was likely responsible for the

majority of the core slide. The flash estimate does not, however, provide a

breakdown of the inflation figures beyond the broad categories.   

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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