The inflation rate, calculated using a harmonized European Union method, rose to 2.9 percent from 2.5 percent in August, the Federal Statistics Office in Wiesbaden said today. It had previously reported an inflation rate of 2.8 percent. In the month, prices rose 0.2 percent.
The European Central Bank last week kept its benchmark rate at 1.5 percent and said euro-region inflation will stay “clearly” above its 2 percent ceiling over the coming months. While some economists had called for a rate cut as a worsening debt crisis hurt economic growth, the central bank instead opted to extend liquidity measures to lenders.
“Inflation is proving to be not as transitory as many had expected,” said Sylvain Broyer, chief euro-region economist at Natixis in Frankfurt. “With this data, an ECB rate cut would be very difficult to deliver.”
The euro was little changed, trading at $1.3788 at 8:46 a.m. in Frankfurt. The single currency has depreciated 4.4 percent against the dollar over the past four months as European leaders struggled to contain the region’s debt crisis.
While a weakening euro is bolstering exports, it’s also making imports more expensive. Household energy was 9.8 percent more expensive from a year ago, while prices of gas rose 5.4 percent, today’s report showed. Heating oil prices jumped 23.8 percent and diesel was 16.7 percent more expensive.
German wholesale prices rose 5.7 percent in September from a year earlier after increasing 6.5 percent in the previous month, the statistics office said yesterday. Annual gains in import and producer prices both weakened in August.
A deepening economic slowdown and waning demand may further ease price pressures. The ECB on Sept. 8 revised its forecast for euro-area growth this year to 1.6 percent from 1.9 percent, and to 1.3 percent from 1.7 percent in 2012. Inflation may average 2.6 percent this year and 1.7 percent next, it said.
“All economic forecasts anticipate that inflation rates will peak this quarter and decrease in 2012,” ECB council member Ewald Nowotny said on Oct. 10. “However, fear is justified on the development of the real economy.”
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