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Business

Inflation in Germany Dips in December

German inflation slowed to 1.1 percent in December, mainly as a result in a steep fall in the price of fuel, the Federal Statistics Office, Destatis, said Tuesday, Dec. 30.

The Euro sculptur at the European Central Bank headquarters in Frankfurt, Germany

Inflation in the euro zone has seen highs and lows in 2008

The preliminary figures brought the annual inflation rate for Europe's largest economy to 2.6 percent in 2008, the highest since 1994 when 2.8 percent was recorded.

The November inflation rate was 1.4 percent, while the rate for October was 2.4 percent and for September 2.9 percent.

"The year 2008 started out with relatively high inflation rates, which were highest in June and July at 3.3 percent" on a 12-month basis, a Destatis statement said.

The early high rates, and subsequent downtrend, were predominantly caused by seesawing prices for fuels and some food stuffs.

Germany's figures now look set to bring euro zone inflation down to below 2 percent in December, only slightly above the medium-term inflationary target agreed on by the European Central Bank (ECB).

Euro zone inflation dropped in November to a 14-month low of 2.1 percent from 3.2 percent in October, according to EU figures, with expectations it will go lower still.

Some analysts believe the ECB will lower its interest rates in 2009 in an attempt to spur the group's economy.

Postbank analyst Fabienne Riefer said inflation in the euro zone could fall to below 1 percent mid 2009, before rising against towards the end of the year, news agency AFP reported.

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