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German Inflation Accelerated More Than Expected In November

Published on Nov 30 2017 8:40 AM in Retail tagged: Germany / Inflation / Consumer Prices

German Inflation Accelerated More Than Expected In November

German inflation accelerated more than anticipated in November, in a sign that robust growth in Europe’s largest economy may be translating into higher prices.

Consumer prices rose an annual 1.8%, the Federal Statistics Office said on Wednesday. That’s faster than October’s 1.5% and beats the 1.7% median forecast in a Bloomberg survey of economists.

Germany’s economy is benefiting from strong global trade and a solid recovery in the euro area, as well as the boost to domestic consumption from the nation’s own record-low unemployment.

Business confidence is at the highest level since the country’s reunification, and the future looks bright given the European Central Bank’s monetary stimulus and its commitment to keeping interest rates low for a long time.

Inflation Pressure

“The higher inflation rate in November is owed in large part to higher energy prices,” Ralph Solveen, an economist at Commerzbank in Frankfurt, said in a client note.

“Factoring out energy prices and the equally volatile food prices, inflation pressure has grown only slightly stronger. There is now hardly any sign of the uptrend in the core rate of inflation that seemed to be on the cards in the summer.”

German economic activity accelerated this month as companies continued their hiring spree to deal with a growing backlog of work.

A crucial piece of the puzzle will be the result of wage negotiations as trade unions try to take advantage of improved conditions to obtain higher salaries and better working conditions from companies.

The German number comes one day before of data for the euro area, where consumer-price gains are expected to pick up to an annual rate of 1.6%, the fastest since April.

While that may be cause for relief at the ECB, which will halve its monthly bond-buying from January, the Frankfurt-based institution has already warned that price growth will slow in the coming months before accelerating again.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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