By Geoffrey Smith

Investing.com -- Inflation in the Eurozone is set to ease only slightly in April, with preliminary data from two of the region’s biggest economies showing that underlined price pressures remained strong this month despite some relief from energy prices.

The consumer price index in Spain fell 0.2% in April, according to the EU’s harmonized method, while more favorable base effects from last year meant that the annual rate of inflation eased to 8.3% from a 30-year high of 9.8% in March.

The numbers suggest that headline inflation may have peaked in Spain at least, according to Angel Talavera, chief European economist for Oxford Economics.

However, the INE statistics office said that underlying inflation, which strips out energy and fresh food prices, continued to accelerate to 4.4% on the year, its highest since 1995. Talavera speculated that the core numbers may have been inflated by the late timing of Easter this year.

One key difference between Easter this year and last year has been the change in Europeans’ willingness to spend on travel and entertainment after the easing of Covid-19 lockdowns. That was reflected in some big increases in prices reported by some of Germany’s largest states earlier.

A preliminary figure for Germany as a whole is due around 8 AM ET (1200 GMT), but Pictet Wealth Management analyst Frederik Ducrozet said via Twitter that there was “little evidence of core inflation easing overall,” with package holiday prices surging and notable rises in other core goods segments.

Annual inflation in Germany had hit 7.6% in March as energy prices skyrocketed in the wake of Russia’s invasion of Ukraine. Those energy prices are seeping through into other sectors now, notably for fresh food, as greenhouses across the region cut down on their use of gas for heating, while the cost of shipping goods to market has risen due to fuel costs.

The euro failed to sustain initial gains on the inflation news and slipped 0.3% to $1.0528 by 6:10 AM ET (1010 GMT).

The European Central Bank, however, remains confident that the price increases are not yet driving a price-wage spiral. ECB Vice President Luis de Guindos said in a speech on Thursday that: "So far wage increases are quite prudent and fully compatible with the target of price stability."

De Guindos has previously supported ending the ECB’s asset purchases in July, a move that would allow the central bank to start raising interest rates immediately.

Elsewhere in Europe Thursday, Sweden’s central bank finally raised its key rate for the first time since the pandemic erupted. The Riksbank lifted its key repo rate to 0.25% from zero, and said that it expects to raise it to somewhere under 2% over the next three years. The Riksbank’s forecast path of interest rates has, however, typically been far above the actual outturn.