German inflation beats forecasts in April
FRANKFURT AM MAIN: Inflation in Germany turned out higher in April than forecast by analysts, official data showed, although the outlook for Europe’s largest economy is more clouded than early this year.
Consumer price growth was stable at 1.6 per cent year-on-year this month, federal statistics authority Destatis said, beating a forecast of 1.5 per cent from analysts surveyed by Factset.
But measured using the Harmonised Index of Consumer Prices – the European Central Bank’s preferred yardstick – inflation shed 0.1 points to read just 1.4 per cent, well short of the institution’s just-below-2.0-per cent target.
“For the ECB, this German inflation data will not make life any easier,” commented ING Diba bank economist Carsten Brzeski.
The central bank has pumped almost 2.4 trillion euros (US$2.9 trillion) into the eurozone economy with ‘quantitative easing’ (QE) bond purchases and set interest rates at historic lows, hoping to pump cash through the financial system and power growth and inflation.
Europe’s powerhouse economy has responded particularly strongly, with Germany booking a 2.2 per cent expansion last year.
Berlin forecasts comparable growth this year and next, while unemployment has fallen to its lowest level since German reunification in 1990.
Nevertheless, inflation has remained sluggish – at 1.3 per cent in March across all 19 eurozone countries – and policymakers are alert to new clouds on the horizon.
If he imposes tariffs on US imports of metals from the EU this week, US President Donald Trump could spark a transatlantic trade war that would hurt export champion Germany particularly hard.
Meanwhile, surveys of business, consumer and investor confidence have lost some of their bounce from the start of the year.
“The case for an extension of QE until at least the end of the year is getting stronger by the day” as ECB policymakers eye such threats to growth and inflation, Brzeski judged. — AFP