- HIS Global Insight analyst Howard Archer
Consumer prices hike in the 17-nation economy has slowed to the lowest level in more than three years, as fuel and telecommunications costs dropped substantially, the EU statistics office, Eurostat said Thursday. Price pressure rose only 1.2% last month from the same month a year earlier, a reading which is significantly lower than the 1.7% inflation recorded for March. On a monthly basis, consumer prices dropped 0.1% in April, from 1.2% in March. Core inflation, which excludes energy, food, alcohol and tobacco, tumbled to 1% from 1.5% a month ago. Latest data is another sign of economic weakness in the region, where most of the countries are languishing in recession. However, a record-low interest rates are expected to spur the inflation, but when economic growth is very weak, authorities worry more about deflation.
"Deflation is perhaps becoming more of a risk than inflation for the eurozone, although it remains unlikely for now at least," HIS Global Insight analyst Howard Archer told the AFP news agency.
"The financial markets appear to have survived the government debt crisis, but the leading economic indicators have recently declined," said Joerg Kraemer, Chief Economist at Commerzbank AG. There is "a significant risk that, contrary to analysts' expectations, the economy will not pick up in the spring," he added.
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