BCN-13 German inflation keeps overshooting in October

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ZCZC

BCN-13

GERMANY-ECONOMY-INDICATOR-INFLATION

German inflation keeps overshooting in October

FRANKFURT AM MAIN, Oct 30, 2018 (BSS/AFP) – Inflation in Europe’s largest
economy Germany remained above the European Central Bank’s target in October,
official data showed Tuesday, contrasting with an earlier release showing
sluggish growth in the eurozone.

Prices added 2.5 percent year-on-year this month, preliminary data from
federal statistics authority Destatis said, a higher reading than anticipated
by analysts surveyed by data company Factset and 0.2 percentage points faster
than in September.

Measured using the ECB’s preferred yardstick, the Harmonised Index of
Consumer Prices (HICP), inflation mounted to 2.4 percent — still well above
the central bank target of just below 2.0 percent.

Much of the increase was down to energy, where year-on-year price growth
jumped more than one point compared with September, to 8.9 percent.

That was more than four times as fast as other major items like food or
housing rents.

At first glance, higher inflation in Germany should confirm the ECB’s plan
to withdraw massive monetary stimulus from the eurozone economy by year’s
end.

After more than three years, the Frankfurt institution plans to halt mass
purchases of government and corporate bonds, designed to pump cash through
the financial system and into the hands of firms and households.

The scheme is intended to stoke economic activity and inflation across the
euro area, and policymakers are confident of staying close to the just-below-
2.0-percent price growth target between now and 2020.

But a new wrinkle appeared in quarterly growth data for the 19-nation
single currency zone Tuesday, as Eurostat reported economic expansion of just
0.2 percent quarter-on-quarter between July and September.

That compared with 0.4 percent in the previous quarter and with analyst
forecasts for the same figure.

BSS/AFP/SR/2000 HRS