EURO-ZONE inflation rose as expected in April, boosted by more expensive fuel and cigarettes, but a fall in core inflation – which strips out the most volatile components – showed inflation pressures were low.

The European Union’s statistics office, Eurostat, said consumer prices in the 16 countries using the euro rose 0.5 per cent month-on-month in April for a 1.5 per cent year-on-year increase, in line with market expectations.

Eurostat said energy prices jumped 2 per cent month-on-month and 9.1 per cent year-on-year. It said this added 0.75 percentage points to the final year-on-year figure.

More expensive heating oil added 0.21 percentage points and tobacco added 0.11 percentage points.

Without the volatile energy and unprocessed food prices – or what the European Central Bank (ECB) calls core inflation – price growth slowed to 0.7 per cent year-on-year in April from 0.9 per cent in March.

The ECB wants to keep inflation below 2 per cent – but close to that figure – in annual terms over the medium term and watches the core inflation measures for signs that changes in the more volatile components are seeping through to other areas.

With core inflation falling and headline inflation expected to stay far below the central bank target this year and next, economists do not expect the ECB to start raising interest rates from the current record lows of 1 per cent until 2011.

Eurostat said separately that the euro zone had an unadjusted trade surplus of €4.5 billion in March, up from €1.6 billion a year earlier as exports expanded 22 per cent year-on-year and imports rose only 20 per cent.

Adjusted for seasonal swings, the euro-zone trade surplus was smaller at €600 million, down from €3.4 billion in February as exports rose 7.5 per cent on the month while imports increased 10.3 per cent. – (Reuters)