German data show inflation topping forecast

Regional data showed consumer prices in Germany probably rose more than expected this month due to higher energy and food costs…

Regional data showed consumer prices in Germany probably rose more than expected this month due to higher energy and food costs.

Data yesterday and today from five German states, which provided a first glimpse of wider inflation trends across the 12-nation bloc, showed prices rose by between 0.3 and 0.4 per cent from February.

Economists had forecast German prices would rise 0.2 per cent on the month.

The data, and that of two other states due today, are used to calculate a national inflation estimate for Europe's largest economy.

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"For the euro area these data would suggest possibly a stable (year-on-year inflation) reading at 2.1 per cent or, depending on the outcomes for the other countries, we could also see a slight uptick to 2.2 per cent," said Morgan Stanley economist Annemarieke Christian.

The annual rate of inflation was little changed in the German states. It accelerated slightly in Saxony, slowed marginally in Baden-Wuerttemberg and held steady in Bandenburg, Bavaria and Hesse.

Economists polled by Reuters before the states' data had forecast German annual inflation would slow in March by a tenth of a percentage point to 1.7 per cent. Since the data analysts have forecast Germany's annual rate will either hold at 1.8 per cent or rise to 1.9 per cent.