German Inflation Unexpectedly Hits Three Year High, Driven By Rising Energy, Food Prices

Tuesday, January 3, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Jan 3, 2017

In what may be both good and bad news for the ECB, German inflation jumped more than expected in December, hitting the highest level in more than three years, according to preliminary data. German consumer prices, harmonized with other European countries (HICP), rose by 1.7% on the year, more than double the November increase of 0.7%, the German Federal Statistics Office said.

This was the highest annual inflation rate since July 2013 and stronger than the consensus forecast of 1.5%; it was just shy of the ECB’s inflation target of 2.0%

On a non-harmonized basis, German annual inflation picked up to 1.7 percent after 0.8 percent in November; prices rose 0.7% on the month, also higher than the 0.6% expected by consensus.

Rising energy prices and higher food costs were the strongest drivers behind the overall increase, a breakdown of the non-harmonized data showed. The surge in energy prices will only lead to more inflationary pressure now that the lowest prices of 2016 have been “anniversaried.”

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