Europe's inflation inches up ahead of interest rate decision

FRANKFURT, Germany (AP) — Europe's painful inflation inched higher last month, extending the squeeze on households and keeping pressure on the European Central Bank to unleash another large interest rate increase.

Consumer prices in the 20 countries using the euro currency jumped 7% in April from a year earlier, just down from the annual rate of 6.9% in March, the European Union statistics agency Eurostat said Tuesday.

Food prices eased a little, falling to an annual 13.6% from March’s 15.5%, while energy prices rose a more modest 2.5%.

Core inflation, which excludes volatile food and fuel, slowed slightly but was still high at 5.6%, underlining the expectation that the ECB will press ahead with its campaign to beat inflation into submission with rate hikes. The question is: How quickly will the bank go?

Analysts say the ECB's meeting Thursday in Frankfurt could end in an increase of a quarter- or a half-percentage point. A quarter-point hike would be a moderation in the bank's series of rapid increases, while a half-point would underline concern that inflation is still not heading back toward the bank's goal of 2% considered best for the economy.

While the slight fall in food inflation is good news, economists say those are partly statistical quirks, due the fact that lower figures from before the current outbreak of inflation have aged out of the annual comparison, a so-called base effect.

Of more concern is core inflation, considered a better measure of price pressures in the economy from demand for goods and higher wages.

This bout of inflation was initially spurred by high energy prices tied to Russia's invasion of Ukraine: Moscow cut off most of its natural gas supplies to Europe, and there were fears the war would take large amounts of oil off the market.

.

..