Germany: Inflation edges down in January
January 30, 2012
In January, consumer prices dropped 0.4% over the previous month according to a preliminary flash estimate released by the Federal Statistics Institute (Destatis). The monthly reading contrasted the 0.7% increase observed in December and marked the first monthly drop in one year. The January result was virtually in line with market expectations that had inflation declining 0.5%. As a result of the monthly drop, annual inflation edged down from 2.1% in December to 2.0% in January. According to the Institute, annual inflation in January was driven by higher prices for household energy and motor fuels. At the current level, inflation sits just a notch above the European Central Bank's inflation target of ?below but close to 2%.? A complete and more detailed inflation data set will be published on 10 February. The Bundesbank expects inflation to average 1.8% this year, before moderating to 1.5% in 2013.
Author: Ricardo Aceves, Senior Economist