The final version of the Eurozone Consumer Price Index for April was published today. Compared to April 2019, the inflation rate is only +0.3 percent after +0.7 percent in March. Inflation in the EU is 0.7 per cent after 1.2 per cent in March. Why are consumer prices in the Eurozone currently rushing full steam ahead towards deflation? It is clear – the oil price shock is having a delayed impact on consumer prices, and the effects are slowly becoming apparent. In April, energy prices for consumers fell by 9.7 percent year-on-year, compared to -4.5 percent in March.
This of course lowers the overall average, which, thanks to a 3.6 percent increase in food prices, is not sliding into the red. Almost all of Eastern Europe is experiencing significant price increases. These often exceed 2 percent (see the first chart), while the rest of the EU either sees only minimal price increases or has already entered deflation. Recently, the oil price had risen significantly again. Will it take another one or two full months before this has a positive effect on the overall average consumer price?