Consumer price inflation in the Euro Area remained steady at 2.2% in April 2025, slightly exceeding market expectations of 2.1% and continuing to hover just above the European Central Bank’s (ECB) 2.0% medium-term target, according to a preliminary estimate from Eurostat.
Euro area inflation steady at 2.2% in April
The unchanged annual rate reflects a complex balancing act between declining energy costs and persistent price pressures in other key sectors. A sharper drop in energy prices—falling 3.5% year-on-year compared to a 1.0% decline in March—provided some disinflationary relief. However, this was more than offset by stronger inflation in services, which accelerated to 3.9% from 3.5%, and in food, alcohol, and tobacco, which edged up to 3.0% from 2.9%.
Prices for non-energy industrial goods rose by 0.6% for the second month in a row, suggesting that underlying goods inflation has stabilized, though it remains subdued compared to services. Meanwhile, core inflation—which strips out volatile components like food and energy—picked up to 2.7%, rebounding from a three-year low of 2.4% in March and surpassing analysts' expectations of 2.5%. The uptick in core inflation may signal that underlying price pressures are reasserting themselves, particularly in labor-intensive sectors like hospitality, healthcare, and personal services, where wage growth has remained robust.
Monthly inflation also flat
On a monthly basis, consumer prices rose by 0.6% in April, matching the increase seen in March, and reinforcing concerns that inflation may prove stickier than anticipated. The persistence of elevated core inflation, in particular, could complicate the ECB’s path forward as it weighs the risks of easing policy too early against the need to support flagging economic growth across the bloc. Policymakers will be closely watching upcoming wage and services data for further signs of entrenched inflationary pressures before making decisions at the June policy meeting.
