Germany: Inflation rises to highest level in more than two years
January 27, 2011
In January, consumer prices dropped 0.5% over the previous month, on the back of seasonal factors, according to a preliminary estimate released on 27 January by the Federal Statistics Institute (Destatis). The monthly fall contrasted the 1.0% spike observed in December. Despite the monthly price drop, inflation rose from 1.7% in December to 1.9% in January, which marked the highest level since October 2008. The reading, however, undershot private sector analysts' expectations of a 2.2% inflation. Final results will be published on 11 February. According to the Statistics Institute, higher prices for energy (particularly mineral oil products, electricity and gas) as well as for food were the main drivers behind rising inflation, continuing a pattern observed over the course of 2010. Moreover, HICP inflation (based on the harmonised consumer price index) rose from 1.9% in December to 2.0% in January. The Bundesbank expects inflation to moderate to 1.7% this year and to 1.6% in 2012.
Author: Ricardo Aceves, Senior Economist