Germany: Higher inflation persists in February amid rising energy costs
February 25, 2011
In February, consumer prices climbed 0.5%, according to a preliminary estimate released on 25 February by the Federal Statistics Institute (Destatis). The monthly jump contrasted the revised 0.4% drop observed in January (previously reported: -0.5% month-on-month). Annual inflation matched the 2.0% inflation level observed in January, but fell a notch short of market expectations, which had seen inflation rising to 2.1%. At the current level, inflation hovers around the European Central Bank's target of close to but below 2.0% over the medium term. Complete and more detailed data will be published on 11 March. According to the Statistics Institute, rising prices for heating oil and motor fuels, as well as for electricity were the main drivers behind the higher rate of inflation, continuing a pattern observed in the previous months. Moreover, HICP inflation (harmonized index of consumer prices) rose from 2.0% in January to 2.2% in February. According to private sector analysts, the effects of the recent oil price spike sparked by the political turmoil in the Middle East and North Africa may not have been included in the February data. However, analysts expect that if the turmoil worsens, energy prices may push consumer prices even higher next month. In its December macroeconomic outlook report, the Bundesbank expects inflation to moderate to 1.7% this year and to 1.6% in 2012.
Author: Ricardo Aceves, Senior Economist