Germany: Inflation rises to two-year high
April 27, 2011
In April, consumer prices rose 0.2%, according to a preliminary flash estimate released on 27 April by the National Statistics Institute. The monthly rise was below the 0.5% increase observed in March, but overshot market expectations, which had anticipated consumer prices rising a more subdued 0.1%. As a result of the monthly increase, annual inflation jumped from 2.1% in March to 2.4% in April, the highest level since October 2008. According to the flash estimate report, the annual consumer price increase reflected sharp price increases for energy, in particular for heating oil and fuels. Moreover, in April HICP inflation (based on the harmonized index of consumer prices) jumped to 2.6% from 2.3% in March. Complete and more detailed inflation data will be published on 11 May. In its spring projections, the government expects headline inflation to average 2.4% this year, before falling to 2.0% in 2012. Meanwhile, Bundesbank President Axel Weber recently stated that the inflation rate may exceed 3.0% ?during some months in the second half of the year? and that headline inflation will rise towards an average of 2.5% this year. The statement suggests that the Bank may revise its inflation estimate for this year. In December, the Bank had expected inflation to average 1.7% this year.
Author: Ricardo Aceves, Senior Economist