Euro-Zone Inflation Seen Slowing as Policymakers Ponder Tariffs

m9dkrsaw0g60ao[cjf5]tjvo_media_dl_1.png Eurostat, Bloomberg survey of ec

Article content

(Bloomberg) — The European Central Bank’s task of restoring 2% inflation is almost complete, with April’s reading set to come in only a fraction north of that target.

Article content

Article content

Consumer-price growth probably slowed to 2.1% this month, according to the median forecast of 32 economists surveyed by Bloomberg. An underlying measure that strips out volatile elements such as energy is predicted to tick up to 2.5% in readings due next Friday.

Article content

Article content

ECB policymakers have struck an optimistic tone on inflation of late. President Christine Lagarde highlighting again on Friday that “the disinflation process is well on track” and “looking ahead, inflation is expected to hover around our 2% target.” French central-bank chief — Francois Villeroy de Galhau — went further still, concluding that there “is currently no inflationary risk in Europe.”

Article content

Article content

Numbers from his country, due on Wednesday, support that statement, with economists predicting a slowdown to just 0.7%. Meanwhile, German and Italian readings will stay above 2%. 

Article content

What Bloomberg Economics Says…

Article content

“We see inflation moving below the ECB’s target in the summer, partly reflecting lower-than-expected energy costs, but also a moderation in services cost pressure. With growth weak and goods prices likely subject to disinflation, the ECB will keep cutting.”

Article content

—Jamie Rush, chief European economist. For the full week ahead, click here

Article content

US President Donald Trump’s tariff push is likely to be disinflationary for the euro area in the short term, policymakers said in Washington this week. ECB Chief Economist Philip Lane told Bloomberg Television that sputtering economic output across the euro area is contributing to slower price growth, and that’s before the effects of eventual US duties kick in. 

Article content

Article content

Those weak economic numbers will be on display next week as well, with first-quarter gross-domestic-product-data set to show France grew just 0.1%, while Germany, Italy and the wider euro area each expanded 0.2%. Those figures — due on Wednesday along with a slew of smaller economies — don’t yet include the impact of Trump’s April 2 tariff annoucement, which he later partially paused. 

Article content

“Business surveys for April suggest that US tariffs have not done much damage in the euro-zone so far,” said Capital Economics Chief Europe Economist Andrew Kenningham. “But we think there will be a noticeable impact in the coming months and have reduced our forecast for euro-zone GDP growth to almost zero for the second and third quarters.”

Article content

—With assistance from Mark Schroers and Mark Evans.

Article content