German Inflation Probably Slowed to the Weakest Level Since 2010

German inflation probably slowed in April to the lowest level in more than two years.

The inflation rate in Europe’s largest economy, calculated using a harmonized European Union method, fell to 1.7 percent from 1.8 percent in March, according to the median forecast of 19 economists in a Bloomberg News survey. That’s the lowest since November 2010. German states are due to report inflation data through the course of today before the Federal Statistics Office in Wiesbaden publishes national data at 2 p.m.

“We are observing pretty low inflation rates at the moment, not just in Germany but in the entire euro area,” said Stefan Muetze, an economist at Helaba in Frankfurt. “That gives the European Central Bank a good option to explain a possible interest-rate cut.”

ECB policy makers, who are due to convene on May 2 for their monthly meeting, have signaled they’re looking at a range of measures to boost economic growth, including cutting interest rates. President Mario Draghi said on April 19 that economic risks are still on the downside and that the situation hasn’t improved this month.

In the 17-nation euro area, inflation probably slowed to 1.6 percent from 1.7 percent, according to a separate survey of economists. The EU’s statistics office in Luxembourg will publish that report at 11 a.m. tomorrow.

Risks to the outlook for inflation “continue to be broadly balanced,” Draghi said after the last rate decision on April 4. The ECB in March cut its inflation projection for 2014 to 1.3 percent from 1.4 percent and predicted annual consumer-price gains will average 1.6 percent this year. It aims to keep inflation just below 2 percent.

For Germany, the Bundesbank forecasts inflation will average 1.5 percent this year and 1.6 percent in 2014.

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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