Oil seen boosting German inflation to 4-year highs

Annual German inflation probably rose at an even faster pace than the four-year high forecast for September, prompting economists…

Annual German inflation probably rose at an even faster pace than the four-year high forecast for September, prompting economists to warn that inflationary risks for the euro zone could be looming.

Analysts said the consumer price data from two German states showing soaring oil prices and a hike in tobacco taxes had ratcheted up annual inflation to multi-year highs sent out a clear signal to the European Central Bank to step up vigilance.

Data from Hesse and Saxony on Friday showed the annual rate of inflation in the two states had reached 2.2 per cent and 3.1 per cent respectively. This was the highest in over four years for Hesse and in almost 11 years in Saxony. Figures from six German states provide the first indications of wider price trends across the euro zone, where annual inflation was stable at 2.2 per cent during August, above the ECB's threshold of close to but below two per cent.

Eurostat, the European Union's statistics office, is due to release a preliminary estimate for inflation in the euro zone in September on September 30th.

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An initial forecast of analysts this week saw euro zone inflation rising to 2.4 per cent in September.