Consumer price inflation (CPI) in the eurozone was flat at 1.2 per cent in April, down from 1.3 per cent in March, according to the final inflation reading by Eurostat. On the other hand, core inflation, which excludes volatile items such as food and energy, fell by 0.3 percentage points to 0.7 per cent, as expected. Core inflation is seen as a more reliable measure of inflationary pressures.
Prices were dragged down by inflation in the services sector, which dipped by half a percentage point to one per cent. This phenomenon is common around Easter time.
On a monthly basis, the harmonised index of consumer prices gained 0.3 per cent in April. Inflation continues to stay below the European Central Bank’s target of ‘below, but close to two per cent’.
In the meantime, the German ZEW Economic Sentiment Index was unchanged at -8.2 in May, survey data from the Mannheim-based think tank ZEW showed last week. The reading was a five-and-a-half year low but in line with expectation.
“The effects of the relatively positive values for German exports and production in March 2018 have been overshadowed in the most recent survey by uncertainty motivated by recent political events,” ZEW president Achim Wambach, said.
Additionally, the survey showed that the inflation expectations index for Germany during May rose 12.5 points on month to 66.5 as crude oil prices increased significantly after the US pulled out of the Iran nuclear treaty.
Finally in the United States, homebuilding tumbled in April and permits fell amid shortages of land and skilled labour. Housing starts fell by 3.7 per cent to a seasonally adjusted annual rate of 1.287 million units in April, the Commerce Department said last week. The decline reversed March’s rise.
On the other hand, March’s data was revised to show housing starts rising to 1.336 million instead of the previously reported 1.319 million unit pace.
Building permits fell 1.8 per cent to 1.352 million units last month. Economists had predicted that housing starts would decrease to a rate of 1.310 million units last month and permits declining to 1.350 million units.
This report was compiled by Bank of Valletta for general information purposes only.