Eurozone inflation accelerated to a two-year high in April, driven by higher energy prices. Inflation rose to 1.6 per cent in April from 1.3 per cent in March. That was the highest rate since April 2019, when inflation was 1.7 per cent. On a monthly basis, the harmonised index of consumer prices advanced 0.6 per cent in April.

Meanwhile, core inflation eased to 0.7 per cent from 0.9 per cent in the previous month. Energy price inflation surged to 10.4 per cent from 4.3 per cent and non-energy industrial goods prices rose 0.4 per cent, following a 0.3 per cent increase. Eurozone inflation is likely to trend higher and will possibly average about 2.5 per cent in the second half of 2021.

Meanwhile, Germany’s producer prices increased by 5.2 per cent year-on-year in April, faster than the 3.7 per cent rise seen in March. This was the highest increase since August 2011, when prices rose after the financial crisis. On a monthly basis, producer price inflation eased slightly to 0.8 per cent, in line with expectations, from 0.9 per cent in the previous month. The annual increase in producer prices was primarily driven by an 8.2 per cent rise in intermediate product prices. Also, energy prices rose sharply by 10.6 per cent in April. Excluding energy, producer prices rose 3.6 per cent annually in April.

Finally, in the UK, house price inflation accelerated to its highest level in 14 years in March, as the house price index rose by 10.2 per cent year-on-year following a 9.2 per cent increase in February. This increase was the highest since August 2007. The annual rate has climbed steadily since July last year, when it was 1.8 per cent.

London remained the region with the lowest annual growth, of 3.7 per cent, for the fourth consecutive month. It seems that the pandemic may have caused house buyers to reassess their housing preferences.

The average house price was £256,000 in March this year, which was £24,000 higher than in the same month last year. Compared to the previous month, average house prices in the UK increased 1.8 per cent in March, which was double the 0.9 per cent rise seen in the same month a year ago.

The report was compiled by Bank of Valletta plc for general information purposes only.