German Inflation Accelerates More Than Forecast to Reach 2%

  • Inflation reading compares with 1.9% seen by economists
  • ECB is due to hold a conference after keeping policy unchanged

Inflation in Europe’s largest economy strengthened more than economists forecast in April, rebounding after an Easter-holiday related dip the previous month.

Consumer-price growth in Germany accelerated to 2 percent from 1.5 percent the previous month, the Federal Statistical Office said on Thursday. The reading compared with the median forecast of economists for a reading of 1.9 percent.

The data came as the European Central Bank decided to keep interest rates and asset purchases unchanged as expected after a meeting of policy makers on Thursday. President Mario Draghi, under growing pressure to start mapping out the eventual exit from the ECB’s unprecedented stimulus, will explain the decision at the news conference at 2:30 p.m. in Frankfurt.

The increase in Germany’s inflation rate may foreshadow the broader euro area. Data on Friday is forecast to show price growth in the 19-nation region accelerated to 1.8 percent from 1.5 percent. The core rate may have picked up to 1 percent from 0.7 percent.

Draghi has so far argued that stronger inflation is mainly driven by volatile components like oil and food, while underlying price pressures remain subdued. Still, the signs of economic improvement are mounting, with euro-area confidence surging to the highest in almost a decade this month, a European Commission report showed on Thursday.

— With assistance by Kristian Siedenburg

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