The process of falling inflation in the Eurozone may have stalled for the first time since this year in April. The region's economy had just emerged from a slight recession in late 2023 in the previous quarter.
According to the median estimate of the economists surveyed, consumer prices could rise 2.4% year over year. They expect GDP growth of 0.1% in the first quarter.
These Tuesday reports are likely to be in line with the ECB's views when it made its decision earlier this month. ECB President Lagarde described the economy as weak at the time, and it is expected that the path back to inflation will be “bumpy.”
Considering this outlook, policymakers are preparing to cut interest rates at the June 6 meeting to ease the degree of policy austerity in the Eurozone after an unprecedented cycle of austerity.
Although overall inflation figures are likely to remain the same after energy costs soared due to tension in the Middle East, basic inflation indicators excluding such volatile items may reassure officials that inflation is still declining.
Economists expect core inflation to slow to 2.6% in April, marking a step closer to the 2% target. Policymakers believe inflation will reach target levels by the middle of next year.
The upcoming national reports may further validate Lagarde's expectations of data fluctuations. The German and Spanish inflation reports to be released on Monday are expected to show an increase, but this is expected to be offset by the inflation data released by France and Italy on Tuesday.
Meanwhile, a slight rebound in economic growth may partly reflect Lagarde and economists' growing agreement that the German economy has reached a turning point. The weak German economy has been putting pressure on the Eurozone for some time, but it may now be recovering.
