April 27, 2017 / 10:42 AM / 3 months ago

German inflation picked up in April, state data suggest

3 Min Read

BERLIN (Reuters) - German consumer inflation bounced back in April and came close to the European Central Bank's price stability target of just under 2 percent, regional data suggested on Thursday.

The figures from several German states hinted that price pressures in Europe's biggest economy - partly due to a rise in transportation costs - are slowly building up as an economic upswing continues and the labour market booms.

The German data followed Spanish price figures that showed consumer inflation prices rose more than expected to 2.6 percent on the year in April.

In Germany's most populous state, North Rhine-Westphalia, annual inflation picked up to 2.1 percent from 1.7 percent in March. It also rose to 2.1 percent in Hesse and Saxony.

In the eastern state of Brandenburg, it reached 1.8 percent while it accelerated to 1.9 percent in Bavaria and to 2.0 percent in Baden-Wuerttemberg.

People walk on a shopping street in the southern German town of Konstanz January 17, 2015.Arnd Wiegmann

The state readings, which are not harmonised to compare with other euro zone countries, will feed into nationwide inflation data due at 1200 GMT.

A Reuters poll conducted before the release of the regional data suggested overall consumer price inflation rose to 1.9 percent in April from 1.5 percent in March.

The inflation rate for the entire euro zone, due on Friday, is expected to have risen to 1.8 percent in April from 1.5 percent in March, economists polled by Reuters said.

The ECB has slashed interest rates and adopted a bond-buying programme worth 2.3 trillion euros (1.92 trillion pounds)to pump money into the region's economy.

The central bank is set to keep its ultra-easy policy stance firmly in place after a meeting on Thursday but may acknowledge better growth prospects, setting the stage for a small signal as early as June about an eventual reduction of stimulus.

ECB President Mario Draghi is likely to point to still-weak inflation, muted wage growth and an uncertain outlook to argue that easing off the accelerator now could unravel years of work that have consumed much of the ECB's firepower, a poll of analysts showed

Reporting by Michael Nienaber; Editing by Tom Heneghan

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