Germany: Harmonized inflation inches higher in February
Harmonized consumer prices rose 0.6% month-on-month in Germany in February, swinging from the 0.8% drop in January. The figure was driven by strong price rises for food and non-alcoholic beverages, and clothing and footwear. This more than offset cheaper transport prices.
Harmonized inflation, meanwhile, inched up to 1.7% in February from 1.6% in January, marking a 10-month high. However, annual average harmonized inflation was stable at 1.4% for the fourth consecutive month. Lastly, consumer price inflation was stable at January’s 1.7% in February while annual average consumer price inflation was stable at 1.5%.
Looking ahead, inflation is expected to remain relatively muted this year on subdued economic activity amid a dichotomy of external headwinds offsetting robust domestic demand and low oil prices. The impact of the large-scale outbreak of the coronavirus in Europe is not straightforward, and will affect German price pressures through both demand and supply channels, with the overall impact unclear.