German inflation outstrips forecasts in November
FRANKFURT AM MAIN: Inflation in Germany grew faster than expected in November, official data showed yesterday, welcome news for the European Central Bank as it begins to wind down its price growth-stoking policies. Prices in Europe’s largest economy increased 1.8 percent year-on-year, federal statistics authority Destatis said in preliminary figures, slightly faster than the 1.7-percent pace predicted by analysts and the 1.6 percent recorded in October.
Energy costs grew the fastest, at 3.7 percent, while food costs grew 3.2 percent.
There were slower price increases for services and home rental costs. Inflation also picked up to 1.8 percent when measured using the ECB’s preferred yardstick, the harmonized index of consumer prices, from 1.5 percent last month. Central bank policymakers target price growth of close to, but below 2.0 percent, believed to be most favorable to growth.
The ECB has intervened massively in the eurozone economy in pursuit of its goal, with historic low interest rates, cheap loans to banks and tens of billions of euros in government and corporate bond purchases per month. The schemes are intended to pump cash through the financial system and into the real economy of businesses and households.
Economic growth has picked up in the 19nation single currency area since the central bank’s unprecedented measures, prompting it to announce last month that it will halve its monthly bond-buying from January, to 30 billion euros ($35.5 billion).
Critics, especially in Germany, have long warned that too much easy money risks creating bubbles in some economic sectors and softening the market discipline that would usually prevent states, companies and households from borrowing too much. —AFP