Late Easter holidays send the EMU inflation rate upwards

The Euroland inflation rate has jumped appreciably upwards. The annual rate rose from 1.4% in March to 1.7% in April. The main reason for this was the performance of service sector prices, where the inflationary pressure was disproportionately strong. This was presumably the product of the relatively late Easter date this year. Indeed, unlike in 2018 the Easter holidays fell in April this time. This meant that in April the price rise for services for transportation and overnight accommodation was well above the average, while the increase in the other categories in the commodity basket was not pronounced.

The Easter date had an especially clear impact in Germany. Here, the Harmonised Index of Consumer Prices (HICP) calculated according to the European standard rose from 1.4 to 2.1%. While no details were released for Germany as part of the flash estimate, the data on the national consumer price index point to a tangible increase in service sector prices.

In the other major EMU member states the flash estimates also showed a higher inflation rate, yet the increase is not as strong as it is in Germany. Thus, for example, the HICP in France edged up from 1.3 to 1.4%, in Italy from 1.1 to 1.2% and in Spain from 1.3 to 1.6%. In the majority of cases, it was again higher service sector prices that triggered the increase. The annual rate for energy prices likewise rose in most cases, albeit only slightly.

In May, the Euroland inflation rate will presumably be a little lower again since the Easter effect has eased. We expect that in the coming months energy prices will hardly be a clear price-driving factor in the wake of the weaker rises in the price of crude oil. Domestic pricing pressures also look set to remain moderate. Against this backdrop, we uphold our inflation forecast of 1.4% for the year 2019 as a whole.

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