Germany: Inflation jumps to two-year high
November 27, 2010
In November, consumer prices rose 0.1%, according to a preliminary flash estimate released on 26 November by the Federal Statistics Office (Destatis). The November reading mirrored October's reading but contrasted market expectations, which had consumer prices falling 0.1%. As a result of the monthly increase, annual inflation jumped from 1.3% in October to 1.5% in November, which represents the highest level since October 2008. Despite the increase, inflation remains well below the European Central Bank inflation target of 2.0%. More complete data will be published on 9 December. According to the flash report, higher prices for petroleum products, as well as for fruits and vegetables were the main drivers behind the annual increase. Moreover, annual harmonised consumer price inflation (HICP) followed the developments of the consumer price index (CPI) and jumped from 1.3% in October to 1.6% in November. The federal government estimates inflation to average 1.1% this year and 1.3% 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