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German CPI expected to rise 1.2 percent in February

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German CPI expected to rise 1.2 percent in February

Consumer inflation in Germany is expected to rise at a slower rate than forecast in February, putting pressure on the European Central Bank ahead of its March policy meetings.

Germany’s gauge of consumer price inflation rose 0.6 percent in February, a flash estimate from the Federal Statistics Office showed today. Compared to year-ago levels, consumer price inflation is expected to rise 1.2 percent, compared to 1.3 percent the previous month. Harmonized CPI, which is based on a methodology consistent across all European Union member-states, rose 1 percent annually.

The consensus in a Reuters survey of economists forecast no change in national CPI. The Harmonized rate was expected to fall from 1.2 percent to 1.1 percent.

The price of goods rose 0.6 percent annually. Energy prices declined for the third time in four months at a rate of 2.7 percent annually, official data showed. Food prices, meanwhile, are expected to have risen 3.5 percent annually.

Final data on German consumer price inflation is scheduled to be published on March 14.

The weaker than forecast flash estimate raises concern Europe’s largest economy may not be growing as fast as forecast in the early part of the year. Although inflationary pressures remain tame in Germany, the situation in the rest of the Eurozone is much more troubling. Eurozone consumer inflation stabilized at 0.8 percent annually in January, according to a revised estimate from the European Commission. The revised January estimate showed inflation that month fell at its fastest ever pace, thanks to a decline in non-energy products.

The ECB, which is scheduled to meet March 6, is expected to make no changes to the benchmark lending rate. Interest rates are expected to remain at 0.25 percent until mid-2015.

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