Germany: Inflation remains subdued in October
October 27, 2010
In October, consumer prices rose 0.1%, according to a preliminary flash estimate released on 27 October by the Federal Statistics Office (Destatis). The monthly increase contrasted the 0.1% drop observed in September, but was in line with market expectation. Annual inflation remained unchanged at September's 1.3%, which is the highest level since November 2008. At the current rate, inflation is still below the European Central Bank's definition of price stability. Final results will be published on 9 November. According to the flash report, the main drivers of the October increase were higher prices for petroleum products, as well as for fruits and vegetables. Moreover, annual harmonised consumer price inflation (HICP) followed the developments of the consumer price index (CPI) and remained at September's 1.3%. The federal government estimates inflation to average 1.3% this year and 1.4% in 2011, while the Bundesbank expects inflation to rise to 1.2% this year and to 1.6% in 2011.
Author: Ricardo Aceves, Senior Economist