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Euro-area inflation accelerates after string of upbeat data
[FRANKFURT] Inflation in the euro area accelerated more than expected and a core measure jumped the most in nearly a year, capping a week of encouraging data for the European Central Bank.
Consumer prices rose 1.7 per cent in April from a year earlier - the strongest number since November. The narrower inflation gauge that strips out volatile components such as energy and food came in at 1.2 per cent, a six-month high, surging from 0.8 per cent in March. Both readings beat economist estimates.
The pickup in inflation - a key metric for the ECB's monetary policy - comes just days after a report showing the pace of growth in euro-area economy unexpectedly doubled in the first quarter amid a surge in Spain, resilience in France and a rebound in Italy. That should make additional stimulus less urgent, with policy makers already expressing some confidence that the economy is stabilising.
Bundesbank President Jens Weidmann on Thursday touted Germany's excellent labour-market situation and rising incomes as a source of strength for private consumption that should tide the economy over its soft patch. He also urged the ECB to press ahead with its exit from unconventional monetary policy if inflation allows.
The pickup in price growth may have been partly driven by temporary factors that are likely to unwind in May. Germany data earlier this week showed inflation accelerated at the fastest pace in five months in April on the back of surging cost of package holidays - a side effect of Easter holiday that came later than last year.
The reading for core inflation now matches a ceiling it hasn't breached in two years, underlining the struggle for the ECB to achieve sustainable increases in consumer prices.