The Eurozone inflation edged up to 7 percent from 6.9 percent in March. However, this increase is mostly caused by the 13.6 percent increase in food prices.
Another measure of inflation, the one most watched by policymakers is core inflation. Core inflation does not have food and energy prices in the basket of goods and services that it measures. This allows policymakers to see the real rate of inflation better.
The core inflation in the Eurozone edged down to 5.6 percent from 5.7 percent last month, for the first time in 10 months. The European Central Bank is trying to make its own soft-landing happen, which means reducing the high inflation without taking the economy into a recession.
The ECB will probably raise its policy rate (the rate at which banks can borrow from the ECB and for overnight loans from each other) by a quarter of a percent or half a percent, most analysts expect.
The ECB does not want to repeat a previous mistake by underestimating inflation, so it's most likely that the rate hikes will not stop until a persistent downward movement in core inflation is seen.
Source: Reuters
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