FRANKFURT (Reuters) – Growth in consumer prices in the euro zone picked up significantly in April, final figures released by Eurostat on Wednesday showed, confirming the first estimate provided at the start of the month.

The consumer price index in the 20 countries sharing the euro reached 7.0% year on year last month, compared to an increase of 6.9% a month earlier, the rise in the costs of services and energy having compensated for a slowdown in the growth of food prices.

Although core inflation, the measure favored by European Central Bank officials, recorded an unexpected slowdown in April, the services component continued to accelerate, a sign of intensifying wage pressures which could keep inflation above the ECB’s medium-term target of 2%.

Excluding food and energy, the index came out in April down by 7.3% over one year, against 7.5% a month earlier. An even narrower measure, which also excludes alcohol and tobacco, shows a slowdown in the rise to 5.6% over one year after +5.7%.

Headline inflation has been above the ECB’s target for almost two years despite an unprecedented hike in interest rates by the Frankfurt institution of 375 basis points since July 2022. According to the latest projections, it would take wait until 2025 before inflation returns to the 2% target.

Inflation in services, which is mainly fueled by labor costs, fell from 5.1% to 5.2%, confirming ECB officials’ fears that nominal wage growth could quickly become problematic.

Markets expect the ECB’s deposit rate to peak at just below 3.75% this summer, but some ECB officials believe that may not be enough to curb inflation.

The next ECB monetary policy meeting is set for June 15.

(Report Balazs Koranyi; Claude Chendjou, edited by Kate Entringer)

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