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November 20, 2019

Inflation in Germany accelerated to ECB target level

Inflation in GermanyInflation in Germany accelerated in January, reaching its highest level in three and a half years. The consumer prices in the Federal Republic grow by 1.9% annually, which is exactly the target level of the European Central Bank of just under 2%. The expectations of economists was for higher inflation of 2% against a CPI growth of 1.7% in December 2016. The data of the statistical office Destatis likely to give new impetus to calls from Germany to the ECB to end the ultra-easy monetary policy.

According to the economists the times of low inflation in Germany ended, as the more expensive oil will catapult the growth of consumer prices to a level above 2% in the coming months. The forests of the analysts are for inflation of 1.8% in 2017.

Destatis data showed that rising prices for energy and food are the main drivers of the acceleration in inflation in the first month of the year.

After today’s data the German criticism of the ECB will likely raise more momentum. Obviously the accelerating inflation combined with lower interest rates leads to more negative real interest rates and damage to savers.

Economists expect the inflation across the Eurozone to accelerate from 1.1% in December to 1.5% in January, but the official figures are expected today.

On a monthly basis, the prices in the first month of the year decreased by 0.6%.

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