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Brussels - Eurozone inflation rose in April, reducing chances the European Central Bank will act soon to ward off potential deflation, although it was below forecast and still within the ECB's "danger zone" of under 1%.
Annual consumer inflation in the 18 countries sharing the euro nudged higher to 0.7% in April from March's 0.5%, which was the lowest since late 2009, the European Union's statistics office Eurostat said on Wednesday.
The reading was lower than the 0.8% predicted in a Reuters poll despite higher spending over the Easter period, reflecting the poor state of the eurozone economy after a long recession and with unemployment at near-record levels.
The euro briefly fell to a two-month low versus sterling on the data but then recovered, with some traders saying they expect markets to gain because the immediate chances of radical steps by the ECB are now lower.
"There's a small relief rally because the probability of ECB action just fell considerably," said a currency trader in London who declined to be named.
April's reading takes inflation back to where it was in February but it is well below 1.2% of April 2013.
The lack of a clear up-tick in consumer prices will keep pressure on the ECB to act to stimulate the economy although it is not expected to do so at its next policy meeting on May 8.
"I don't think it's (the inflation reading) enough below expectations in ECB's forecasts to see them jump into cutting the deposit rate at next week's meeting," said Paul Robson, a senior strategist at RBS.
"They will probably wait until updated forecasts are due in June. That will give them a better idea for the outlook. Core inflation was in line with expectations, which gives them a little cover to not do anything."
The ECB is due to publish updated staff forecasts for inflation and growth stretching through to 2016 when its policymakers meet in June.
Consumer price inflation excluding volatile energy and food costs was a touch higher this month than in March at 1.0%. But while April improved overall because of a smaller fall in energy prices, the pace of price rises in food, alcohol and tobacco was lower than the month before, showing Europeans remain unwilling to spend while economic growth is fragile.
The central bank targets inflation of just below 2% over the medium term and the International Monetary Fund wants to see the ECB take radical steps that could include quantitative easing, or money printing to buy assets.
