Eurozone1 annual inflation2 is expected to be 3.3% in April 2008 according to a flash estimate issued by Eurostat, the Statistical Office of the European Union. It was 3.6% in March - a 16-year high.
On Tuesday we reported that a fall in German inflation in April ould result in a decline in Eurozone inflation.
On Monday, the European Commission had forecast that the average inflation rate in the Eurozone in 2008 would be 3.2% compared with the target of the European Central Bank of "below but close to 2%."
The ECB is not expected to cut its benchmark rate of 4% in the short-term and business has to contend with a Euribor 3-month inter-bank rate of above 4.8%.
Computation of flash estimates
Eurozone inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available3 as well as early information about energy prices.
The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the Eurozone. No detailed breakdown is available. Experience has shown the procedure to be reliable (15 times exactly anticipating the inflation rate and 9 times differing by 0.1 over the last two years).
1. The Member States of the Eurozone are Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia and Finland.
2. Annual inflation is the price change between the current month and the same month of the previous year.
3. he MUICP flash estimate usually includes early price information representing approximately 95% of the Eurozone total consumption expenditure weight.
