German Inflation Unexpectedly Accelerates as ECB Ponders QE Exit

  • Consumer prices rose annual 1.5% in June vs estimated 1.3%
  • ECB edges toward unwinding stimulus as recovery proceeds

Why the Markets May Have Overreacted to Draghi's Comments

German inflation unexpectedly accelerated in June, offering some respite to European Central Bank officials pondering an exit from unconventional stimulus.

The rate rose to 1.5 percent from 1.4 percent, the Federal Statistics Office in Wiesbaden said on Thursday. Economists had predicted a drop to 1.3 percent, according to a Bloomberg survey. Prices rose 0.2 percent from May.

Faster-than-anticipated inflation in Europe’s largest economy -- although still below the ECB’s 2 percent goal -- comes as good news for policy makers investigating why the region’s increasingly robust and broad-based recovery has left only little marks on wages and consumer prices. The central bank has started to discuss unwinding its 2.3 trillion-euro ($2.6 trillion) quantitative-easing program, with President Mario Draghi arguing there’s room to adjust instruments without tightening monetary conditions.

Euro-area consumer price growth probably decelerated to 1.2 percent this month from 1.4 percent in May, economists forecast in a separate survey before a report on Friday. Spain’s inflation rate fell less than expected, while a drop in Italy’s was worse than predicted.

— With assistance by Andre Tartar, and Kristian Siedenburg

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