Eurozone inflation slows in April, sentiment falls

By Jan Strupczewski

BRUSSELS (Reuters) - Euro zone inflation slowed more than forecast in April and business sentiment sagged, boosting the case for eventual ECB rate cuts if inflation subsides further as expected towards the end of the year.

Consumer prices in the 15 countries using the euro rose 3.3 percent year-on-year in April, European Union statistics office Eurostat estimated, down from a record of 3.6 percent in March.

The estimate does not contain monthly data or details, but separate country data already showed inflation falling in Germany, Italy, Spain and Slovenia.

Economists polled by Reuters had forecast inflation at 3.4 percent, although some had revised down their forecasts on Monday after lower-than-expected data on inflation in Germany.

"A further decline in the inflation rate is unlikely in the coming months," said Christoph Weil, economist at Commerzbank.

He noted prices of crude oil and food were still rising and said inflation would not fall below 3 percent until November.

The European Central Bank wants inflation to be just below 2 percent over the medium term.

It has kept rates unchanged at 4.0 percent since mid-2007, weighing rising inflation against slowing growth, but has stressed inflation risks were on the upside, especially if higher wage demands were to trigger a wage-inflation spiral.