Stable headline inflation hides acceleration in the core and services components

Eurozone inflation for April remained steady at 2.2%.

The unchanged headline rate masked some underlying changes. While energy prices recorded stronger deflation, both the core and services measures of inflation, which provide a gauge of domestic price pressures, accelerated.

These increases will remind the European Central Bank (ECB) of possible upside risks to inflation.

Nevertheless, with continued uncertainty weighing on growth in the currency area, we expect the ECB to continue cutting rates over the rest of the year.