Germany: Inflation jumps in February
February 28, 2012
In February, consumer prices jumped 0.7% over the previous month, according to a preliminary flash estimate released by the Federal Statistics Institute (Destatis). The monthly rise contrasted the 0.4% fall observed in January and was above the 0.5% price increase recorded in February 2011. As a result of the monthly jump, annual headline inflation accelerated from 2.1% in January to 2.3% in February, which overshot market expectations that had inflation remaining stable at 2.1%. According to Destatis, annual inflation in February was driven by higher prices for household energy and motor fuels. Meanwhile, HICP inflation (based on the harmonized index of consumer prices) rose from 2.3% in January to 2.5% in February. At the current level, inflation remains above the European Central Bank's inflation target of ?close to but just below 2%.? A complete and more detailed inflation data set will be published on 9 March. The German Central Bank expects inflation to average 1.8% this year, before moderating to 1.5% in 2013.
Author: Ricardo Aceves, Senior Economist