Tags: eurozone | economy | germany | inflation

States Data Suggest German Inflation, Perhaps Eurozone, Picked Up in April

Tuesday, 29 Apr 2014 08:40 AM

The annual inflation rate in Europe's largest economy probably picked up in April, potentially raising the eurozone figure and reducing pressure on the European Central Bank to act, data suggested on Tuesday.

Eurozone inflation is running at 0.5 percent and concerns about deflation are rife. Data due out on Wednesday is expected to show inflation in the single currency bloc picking up to 0.8 percent in April but that would still be below the ECB's medium-term target of just below 2 percent.

On Monday ECB President Mario Draghi played down the likelihood of any imminent money-printing to buy assets, saying that while low inflation would persist, quantitative easing remained a way off, according to a source.

Data from some German states suggested the ECB would not need to take action. In North Rhine-Westphalia (NRW), Germany's most populous state and traditionally a bellwether for the national data, the cost of living rose by 1.7 percent on the year in April, compared with 1.4 percent in March.

Christian Schulz, senior economist at Berenberg Bank, said figures from the states suggested Germany's national inflation rate increased by 0.3 or 0.4 percentage points in April.

"That's also a bit of a precursor for tomorrow's eurozone inflation rate which could then rebound quite nicely," he said.

ECB President Vitor Constancio said on Monday April's inflation figures for the eurozone should not alone trigger a policy change because "it's not just one or two numbers that matter."

Pan-German inflation figures are due to be published at 1200 GMT, with economists polled by Reuters forecasting a 1.4 percent increase in consumer prices after a 1.0 percent rise the previous month.

Schulz said the German data had been volatile in March and April due to the Easter weekend being much later this year than last, postponing price effects on items like package holidays.

"Inflation is likely to rebound with the April data. If you look at the March and April average it may still be slightly below where we were in February but not significantly, not enough to trigger more monetary policy action in May," he said.

"I think the June meeting is more likely for additional easing because then we'll have less distorted may inflation rate."

© 2017 Thomson/Reuters. All rights reserved.

 
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The annual inflation rate in Europe's largest economy probably picked up in April, potentially raising the eurozone figure and reducing pressure on the European Central Bank to act, data suggested on Tuesday.
eurozone, economy, germany, inflation
369
2014-40-29
Tuesday, 29 Apr 2014 08:40 AM
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