Annual inflation slowed in three out of six German states in May, pointing to an easing of price pressures in Europe's largest economy that may give the European Central Bank more scope to loosen policy as the ailing euro zone clamours for growth.
Year-on-year inflation rates slowed in North Rhine-Westphalia (NRW), Saxony and Brandenburg, while remaining steady in Hesse and Baden-Wuerttemberg, data from the states' statistics office showed, as pressure from rising fuel prices subsided.
Only Bavaria showed a modest uptick in the annual rate.
On a month-on-month basis, inflation eased in all six states.Preliminary national data for Germany, due out later today, is based on data from six of its 16 states, which account for more than half of the country's population.
Germany's inflation rate remained consistently above the price stability target of just under 2 per cent for the euro currency area for much of last year, making it difficult for the ECB to balance monetary policy for weaker euro zone countries.
Calls for policies that spur growth have grown louder since the French and Greek elections earlier this month, as peripheral euro zone countries tire of the blistering austerity measures aimed at reducing their debt burdens.
Germany harbours deep-seated fears about inflation stemming from the 1920s when the value of its currency tumbled out of control and it took a wheelbarrow of notes to buy a loaf of bread.
But both the German government and central bank signalled in May that they would tolerate higher prices, as long as inflation in the euro zone remains under control, a move which could help struggling euro zone countries by boosting their competitiveness.
In NRW, Germany's most populous state and a bellwether for the national inflation rate, annual inflation eased to 1.5 per cent in May from 1.7 per cent in April.In Hesse, home to Germany's financial capital Frankfurt, prices remained unchanged at 1.9 per cent year-on-year and fell by 0.2 per cent month-on-month.
Reuters
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