German Inflation Accelerated in November, States Reports Show
Inflation in Germany, Europe’s largest economy, accelerated in November after food and energy prices rose, reports from six states show.
The statistics offices in North Rhine-Westphalia, Brandenburg, Hesse, Bavaria, Saxony and Baden-Wuerttemberg all said their inflation rates rose from October, with the latter reporting a gain to 1.6 percent from 1.1 percent.
Economists predict that German inflation, calculated using a harmonized European method, will quicken to 1.4 percent from 1.3 percent, according to the median of 21 estimates in a Bloomberg News survey. That report, based on data from the six states, is due later today.
While inflation remains contained for now, Germany’s economy is growing at a faster pace than its euro-area peers as countries such as Greece, Ireland, Portugal and Spain grapple with a sovereign debt crisis. That’s widening the divergences in the 16-nation currency bloc, making it harder for the European Central Bank to set policy suitable for all its members.
“The combination of a thriving economy and continuously very low interest rates risks an unwanted acceleration in German inflation,” said Alexander Koch, an economist at UniCredit in Munich. Still, “inflationary pressures remain under control so far,” he said.
German consumer confidence will rise to its highest level in more than three years in December after the economic outlook improved and unemployment declined, boosting households’ willingness to spend, market research company GfK said this week.
Business confidence surged to its highest level in two decades in November as a result of the brightening domestic outlook. The economy, Europe’s largest, will grow 3.7 percent this year, according to the government’s panel of economic advisers.
In Saxony, food prices rose 3.4 percent from a year earlier, fuel prices were up 6.6 percent and heating oil was 19.1 percent more expensive. Clothing and shoe prices rose 4.2 percent. The price of crude oil has gained 14 percent in the past two months.
“Commodity prices have risen somewhat, and that has to be kept under observation” said Christian Lips, an economist at NordLB in Hanover. “But the inflation rate in Germany is still rather muted and under the average level for the euro zone.”
Euro-area consumer prices rose 1.9 percent in November from a year earlier after increasing 1.8 percent in September, the European Union statistics office in Luxembourg said on Nov. 16. That’s the fastest since November 2008.
The ECB, which aims to keep inflation in the euro region just below 2 percent, on Nov. 3 left its key interest rate at a record low of 1 percent. The central bank in September forecast euro-region inflation will average about 1.6 percent this year and around 1.7 percent in 2011.
Monthly Yearly Change Change Saxony 0.0% (0.0%) 1.5% (1.4%) Baden-Wuerttemberg 0.3% (0.0%) 1.6% (1.1%) Bavaria 0.2% (0.1%) 1.7% (1.4%) Brandenburg 0.0% (0.0%) 1.1% (1.0%) Hesse 0.1% (-0.1%) 1.2% (1.0%) North Rhine-Westphalia 0.1% (0.2%) 1.5% (1.2%)
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