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German Inflation Slows in January as Expected by Consensus

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German Inflation Slows in January as Expected by Consensus

Consumer inflation in Europe’s largest economy eased in January, led by a sharp decline in fuel prices.

Germany’s gauge of consumer price inflation declined 0.6 percent in January, official data from the Federal Statistics Department confirmed today. Compared to year-ago levels, consumer price inflation eased from 1.4 percent to 1.3 percent, in-line with estimates. Harmonized CPI, which is based on a methodology consistent across all European Union member-states, rose 1.2 percent annually.

Today’s data confirmed the flash estimate for inflation released at the end of last month.

Mineral oil products, which fell 5.2 percent on the year, were the biggest factor behind the moderate rise in annual inflation. Mineral oil products also include heating oil and and motor fuels, which declined 7.1 percent and 4.6 percent, respectively.

Excluding energy, prices rose 1.8 percent annually, official data showed. Food and non-alcoholic beverages increased 3.2 percent annually, led by a steep rise in fruits and vegetables. Price inflation for alcoholic beverages and tobacco was 3.9 percent. Price inflation for clothing and footwear, meanwhile, was 1.2 percent annually.

Although inflationary pressures have eased somewhat in Europe’s largest economy, they remain considerably higher than the rest of the 18-nation currency bloc. Consumer price inflation in the Eurozone eased to 0.7 percent last month, raising speculation the European Central Bank may consider implementing more accommodative monetary policy. With inflation trending at less than half of the ECB’s target rate, the central bank opted to make no changes to monetary policy at its meeting last week. Instead, policymakers will await more data, which will become available in early March.

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