Preston Stanley Asset Management - German Inflation Dips but Remains Above ECB Target

Preston Stanley Asset Management - Rising energy costs boost German consumer price growth.

According to official data released by Germany’s federal statistics authority, Destatis, German inflation increased at a slightly slower pace last month than in October but still remained well above the European Central Bank target of 2 percent.

German inflation reached 2.4 percent on a yearly basis in October, boosted by increased energy prices which have continued to rise in Germany even though US inventories are reaching record highs and Saudi Arabia has refused to curb production to stabilize the oil market.

Although global crude prices have fallen over the last few months, gasoline prices in Germany have actually increased due to logistical problems with shipping.

In November, the pace of acceleration of consumer price growth slowed slightly to 2.2 percent even though energy prices increased by 9.3 percent, the biggest increase in 7 years. Preston Stanley Asset Management analysts say the slight fall in price growth was due to a decrease in food product inflation which fell 0.5 percent from the previous month.

Analysts at Preston Stanley Asset Management say that inflation growth will likely slow slightly next year when reduced oil prices finally reach Germany consumers. German inflation is expected to reach 2 percent or just below in the first few months of next year.

With robust inflation growth and record low levels of unemployment, Preston Stanley Asset Management analysts say Germany’s central bank will likely support a rapid exit from the European Central Bank’s sizeable monetary stimulus before the end of this year.

Source: Preston Stanley Asset Management


Categories: Consumer Banking

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