Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

German inflation eases in January but not enough for real relief

Economy Jan 31, 2022 21:06
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Shoppers wear mask and fill Cologne's main shopping street Hohe Strasse (High Street) in Cologne, Germany, 12, December, 2020. REUTERS/Wolfgang Rattay

BERLIN (Reuters) -German annual inflation slowed in January but was still higher than expected by analysts and well above the European Central Bank's price stability target of 2% for the euro zone as a whole, preliminary data showed on Monday.

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries (HICP), rose 5.1% year on year compared with 5.7% in December, the Federal Statistics Office said.

The national consumer price index (CPI) rose by 4.9% on an annual basis, easing from 5.3% in December.

A Reuters poll of analysts had forecast the CPI rate at 4.3% and the HICP figure at 4.7%.

"The decline in the inflation rate is only due to the fact that the effect of the temporary reduction in VAT in 2020 no longer distorts the year-on-year comparison upwards as in the previous months," Commerzbank (DE:CBKG) economist Marco Wagner said.

At the same time, supply bottlenecks and high energy prices significantly reduced the expected positive effect, analysts said.

As surveys of German and foreign companies have so far shown no significant easing of supply chain disruption, the year-on-year CPI rates are likely to stay ​​above 4.5% for a few more months, said Michael Heise, chief economist at HQ Trust.

"In view of the serious geopolitical tensions with Russia, betting on a desired drop in energy prices in the near future appears to be wishful thinking," Heise added.

Euro zone inflation hit 5% last month, the highest on record for the 19-country currency bloc, but the ECB expects it back under its 2% target in both 2023 and 2024, even without policy tightening, as one-off pressures ease.

ECB chief economist Philip Lane told a Lithuanian newspaper last week the central bank would tighten policy if inflation was seen holding above its target, but such a scenario appears less likely for now.

The ECB meets next on Thursday but no policy move is expected as the bank unveiled a complex package of measures in December.

Contrary to earlier projections, the German Economy Ministry said last week it expects consumer price inflation to rise further this year.

The head of Germany's IG Metall union said on Thursday that higher real wages would be a key goal in upcoming collective bargaining rounds in the iron and steel, as well as the metal and electrical, industries.

German inflation eases in January but not enough for real relief
 

Related Articles

Top 5 Things to Watch in Markets in the Week Ahead
Top 5 Things to Watch in Markets in the Week Ahead By Investing.com - Aug 07, 2022 3

By Noreen Burke Investing.com -- Wednesday’s July U.S. inflation data will be the main highlight in the week ahead after last Friday’s much stronger-than-anticipated...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email