Preliminary Data Points to Lower Inflation in Germany

Annual inflation in Europe’s largest economy likely slowed in May, data from German states suggested on Monday, probably pushing down the broader euro zone rate and raising pressure on the European Central Bank to act when it meets this week.

Data from six states showed annual inflation rates ranging from 0.6 percent to 1.1 percent. Economists had forecast that the preliminary national rate, due out at 2 p.m. (8 a.m. EDT), would show consumer prices climbed by 1.1 percent on the year.

In North Rhine-Westphalia (NRW), Germany’s most populous state and traditionally a bellwether for the national data, consumer prices increased by 1.1. percent on the year, their lowest annual rate since Sept. 2010.

But ING economist Carsten Brzeski said data from some other states showing weaker inflation would probably push the national figure down below 1 percent.

“It shows euro zone inflation could be weaker than expected, increasing pressure on the ECB to act on Thursday,” he said.

Euro zone inflation stood at 0.7 percent in April – well below the ECB target of close to but just below 2 percent – and a Reuters poll shows economists expect data due out on Tuesday to show it held steady in May.

via Reuters

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