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German inflation hits 3-year high in Dec, good news for ECB

[BERLIN] German inflation rose more than expected in December, hitting the highest level in more than three years, preliminary data showed on Tuesday, a welcome sign for the European Central Bank that price pressures in Europe's biggest economy are pushing up.

German consumer prices, harmonised to compare with other European countries (HICP), rose by 1.7 per cent on the year after an increase of 0.7 per cent in November, the Federal Statistics Office said.

This was the highest annual inflation rate since July 2013 and stronger than a Reuters consensus forecast of 1.3 per cent.

On a non-harmonized basis, German annual inflation picked up to 1.7 per cent after 0.8 per cent in November.

sentifi.com

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Rising energy prices and higher food costs were the strongest drivers behind the overall increase, a breakdown of the non-harmonized data showed.

A strong recovery in German inflation would give conservatives like Bundesbank's President and ECB rate-setter Jens Weidmann more scope to argue for winding down the ECB's bond-buying programme more quickly.

REUTERS

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