Inflation across the eurozone soared to 3% in April as the Iran war drove up energy prices and economic growth stumbled. The figure, released by Eurostat on Thursday, is up from 2.6% in March and 1.9% in February, pushing inflation further above the European Central Bank's 2% target. The ECB left interest rates unchanged on Thursday afternoon.
Energy prices across the single currency bloc surged by 10.9% year on year, compared with 5.1% in March. Services inflation slowed to 3.0%, while food, alcohol and tobacco prices rose by 2.5% and industrial goods prices increased by 0.8%. Eurostat also reported that eurozone growth slowed to 0.1% in the first quarter, down from 0.2% in the previous three months.
Among individual countries, Germany beat forecasts with 0.3% growth in the first quarter. Carsten Brzeski, an economist at ING, said: “Almost exactly one year after the new German government – under Chancellor Friedrich Merz – came into office, today’s data suggests that the German economy is better than its reputation implies. However, it would be risky to assume that today’s performance can simply be continued. The war in the Middle East and soaring energy prices, combined with a lack of structural reform and clear strategy for how to restore competitiveness, do not bode well for Germany’s growth outlook.”
France recorded no growth. Its national statistics body, Insee, said foreign trade made a negative contribution to French gross domestic product, while household consumption fell and production growth was sluggish.
