German inflation hits five-year low in November: data

27th November 2014, Comments 0 comments

Inflation in Germany, Europe's biggest economy, slowed to its lowest level in five years in November, fuelling concerns the region could be on the verge of deflation, data showed Thursday.

In a preliminary flash estimate, the federal statistics office Destatis calculated that German inflation stood at just 0.6 percent year-on-year this month, down from 0.8 percent in October.

The last time inflation in Germany was lower than 0.6 percent was in October 2009.

The flash estimate is based on consumer price data for six key German states. Final data on the basis of all 16 German states are scheduled to be released on December 11.

Using the Harmonised Index of Consumer Prices (HICP) -- the yardstick used by the European Central Bank -- inflation in Germany was even lower at 0.5 percent in November, way under the ECB's annual inflation target of just below 2.0 percent.

The chronically low level of inflation across the 18-nation eurozone has fuelled concern the region could slip into deflation -- a sustained and widespread drop in prices that hampers economic activity and threatens job losses.

While falling prices may sound good for consumers, deflation can trigger a vicious spiral where businesses and households delay purchases, throttling demand and causing companies to lay off workers.

Such concerns persuaded the ECB to cut interest rates to a new all-time low and roll out other anti-deflation measures such as a series of asset purchase programmes to inject cash into the economy.

© 2014 AFP

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