Headline inflation rate rises from 0.5% to 0.7%

Mario Draghi got conflicting signals on inflation in April, as the European Central Bank considers taking unprecedented steps as soon as next week to avert the risk of deflation.

The headline annual inflation rate missed forecasts in rising to 0.7% from 0.5% in March, the European Union’s statistics office in Luxembourg said. Yet the core rate, which strips out volatile items such as energy, food, alcohol and tobacco, rose in line with estimates to 1%, and the price of services increased at the fastest pace in more than a year.

“We didn’t have a shocker, or a smoking gun, that the ECB could use to ease as soon as next week,” said Frederik Ducrozet, an economist at Credit Agricole CIB in Paris.