Germany’s inflation rises to highest level in FIVE YEARS sparking major dilemma for ECB

Friday, December 29, 2017
By Paul Martin

GERMANY has recorded its highest level of inflation since 2012, sparking a major dilemma for the European Central Bank (ECB).

Fri, Dec 29, 2017

Consumer prices in Europe’s most successful economy rose by an average of 1.7 percent in 2017, preliminary data shows.

It marked the biggest increase since 2012, when inflation hit 2.1 percent, according to Germany’s Federal Statistics Office.

High food costs made the largest contribution to the headline price increases, followed by increased rents, analysts said.

The figures will spark debate about whether or not the ECB should stop injecting money into the Eurozone.

Hawkish rate-setters have called for the ECB to unwind its £2.22trillion (€2.55tn) bond-buying scheme to reverse deflation.

They have pointed to increased growth and inflation forecasts for the single currency as reasons to change course.

The ECB’s governing council is due to hold a monetary policy meeting on January 25.

Both consumption and imports have provided impulses for the German economy this year, despite the country’s political uncertainty.

Chancellor Angela Merkel has failed to form a coalition after failing to win a clear majority in a general election in September.

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