Eurozone inflation is expected to drop in April following Germany price data on Monday, which showed a sharp fall.
De Statis, the Federal Statistical Office reported that the harmonised consumer price index for Germany, which is calculated for European purposes, is expected to rise by an annual 2.6% rate in April 2008, down from 3.3% in March. Compared with the previous month, the index is down by 0.3%.
The consumer price index for Germany is expected to rise 2.4% in April 2008 on April 2007 (March 2008: +3.1%), according to results available from six Länder (states). Compared with the preceding month, the rate of change will be –0.2%.
The year-on-year rate of price increase, which is markedly lower than in the previous month, is influenced by package holiday prices, which decreased after the Easter holidays (–13.4% on March, –7.4% on April 2007). Food prices, however, were slightly up again by up to 0.5% on March 2008 and were up by 6.5% to 8.8% – depending on the state – above the price level of April 2007. Liquid fuel prices rose by between 1.1% and 4.6% on the previous month and by between 33.7% and 42.9% on the corresponding month of the previous year. Motor fuel prices did not change much on March 2008; they were by between 7.8% and 10.8% above the April 2007 level.
In March, Eurozone inflation had hit 3.6% – its highest for almost 16 years.
The EU's statistics office Eurostat, will publish a flash inflation estimate for the Eurozone on Wednesday.
The ECB is unlikely to change its monetary stance in the short-term as German inflation could accelerate again in May, on the back of higher fuel prices before falling again later in the year.
On Monday, the European Commission forecasts showed that in 2008 and 2009 inflation would be significantly higher than the ECB’s target annual rate “below but close” to 2%.
The Commission forecasts average Eurozone inflation at 3.2% in 2008.
ECB President Jean-Claude Trichet said on Monday in Vienna, that the ECB believed “the current monetary policy stance will contribute to achieving our objective of price stability”.