German inflation rises to 2.1 % in February

11th March 2011, Comments 0 comments

German inflation rose to an annualised 2.1 percent in February from 2.0 percent the previous month, its fourth consecutive increase, final figures released by the national statistics office showed on Friday.

The Destatis office revised higher its initial inflation estimate of 2.0 percent for the biggest European economy, as unrest in the Middle East and North Africa put upward pressure on oil prices.

The latest figure was also higher than the European Central Bank's medium term target of just under 2.0 percent and supports the reasoning for what looks set to be the ECB's first interest rate hike in almost two years.

German inflation has remained within the target range for quite awhile, and the February reading marked the highest level since October 2008.

On a monthly basis meanwhile, German consumer prices rose by 0.5 percent in February.

The main factors behind the increases were once again energy and food, the data showed.

Household costs for energy gained 9.4 percent in February on a 12-month basis, and the price of heating fuel was 32 percent higher, while the cost of food gained 3.4 percent.

The ECB shocked financial markets this month when president Jean-Claude Trichet hinted that it might hike its main interest rate in April from the current record low of 1.0 percent.

Markets expect the rate to rise first to 1.25 percent, and forecast further increases later this year.

© 2011 AFP

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