German inflation creeps up to 2.4% in April

GERMAN inflation rose slightly in April due to higher food prices and a smaller drop in energy prices than in previous months, preliminary data from the federal statistics office showed on Monday (Apr 29).

German consumer prices, harmonised to compare with other European Union countries, rose 2.4 per cent in April, compared with 2.3 per cent year on year in March.

“The downward trend in the German inflation rate that has been observed for a year and a half may have come to an end for the time being,” Commerzbank economist Ralph Solveen said, adding that the inflation rate is likely to rise again in coming months.

Economists pay close attention to German inflation data, as Germany publishes its figures before the wider eurozone inflation release, expected on Tuesday.

Eurozone inflation is expected to remain at 2.4 per cent, unchanged from the previous month, according to economists polled by Reuters.

The European Central Bank has clearly signalled it will start lowering borrowing costs in June.

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Core inflation in Germany, which excludes volatile food and energy prices, eased to 3 per cent in April from 3.3 per cent in March.

Commerzbank expects the core inflation rate to stabilise around current levels, as companies in the service sector in particular pass on large rises in wage costs to their customers. REUTERS