German Inflation Misses Estimate

German inflation unexpectedly slowed, in a sign that price growth in the 19-nation euro area may also be weaker than anticipated.

Consumer prices in Europe’s largest economy rose an annual 0.2 percent in December after increasing 0.3 percent in November, the Federal Statistics Office in Wiesbaden said on Monday. Economists predicted a pickup to 0.4 percent, according to the median of 20 estimates in a Bloomberg survey.

Before today’s report, economists forecast euro-area inflation accelerated to 0.4 percent last month from 0.2 percent in November. Eurostat will release the figures on Tuesday.

The data could spark calls for the European Central Bank to increase stimulus just a month after President Mario Draghi’s latest effort to rekindle inflation and nurture a fragile economic recovery were met with disappointment in financial markets. A renewed drop in oil prices is damping expectations that inflation rates would rise in coming months, endangering the ECB’s forecast of an average rate of 1 percent in the euro area this year.

In December, the ECB predicted euro-area inflation would accelerate to 1.6 percent in 2017 from 0.1 percent last year. The Bundesbank foresees inflation in Germany at 2 percent next year. The statistics office said on Monday inflation averaged 0.1 percent in 2015.

Bloomberg

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