FRANKFURT (Reuters) – Eurozone price inflation accelerated in April but core inflation slowed unexpectedly, Eurostat’s first estimate released on Tuesday showed, suggesting a Moderate rate hike in interest rates from the European Central Bank meeting Thursday.

The consumer price index rose 7.0% year on year, as expected by economists polled by Reuters, after rising 6.9% year on year a month earlier.

But in recent months, the focus has been on core inflation, which has decelerated more slowly.

Excluding energy and unprocessed food products, the inflation index fell from 7.5% to 7.3%. An even narrower measure, which also excludes alcohol and tobacco, is up 5.6% after 5.7%.

In an encouraging development for the ECB, the rise in processed food, alcohol and tobacco prices slowed by one percentage point to 14.7%, suggesting that the long-awaited turn in food prices may be be happening.

The ECB has raised rates by at least 50 basis points at each of its last six meetings. Some members, including the Governor of the Banque de France François Villeroy de Galhau, recommended that the next possible hikes be more measured.

But others, like executive board member Isabel Schnabel, said a half-point hike should be an option as price growth is proving difficult to contain.

Almost all of the 26 members of the Governing Council, however, seem to agree on the need for a further tightening of monetary policy.

One of the main concerns is a stronger acceleration in wage growth, which would drive up the cost of services.

Services inflation accelerated from 5.1% to 5.2%, but price growth for non-energy industrial goods, another crucial segment, slowed from 6.6% to 6, 2%.

(Balazs Koranyi, Laetitia Volga, edited by Jean-Stéphane Brosse)

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