Economists exhale as German inflation creeps up | Business| Economy and finance news from a German perspective | DW | 30.03.2015
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Business

Economists exhale as German inflation creeps up

Inflation in Germany is back on track after a bout of low consumer prices that had policymakers worried Europe's largest economy could succumb to a period of harmful deflation.

The danger of Germany falling into a precarious deflationary spiral seemed no longer imminent, data showed on Monday as statisticians logged an uptick in inflation of 0.2 percentage points in March over one month prior.

At 0.3 percent, the year-on-year inflation rate in Germany was still well below targets of just under 2 percent regarded by ECB economists as optimal. But it was considerably higher than in January, when consumer prices fell for the first time since 2009 by 0.4 percent.

With the price of a barrel of oil hovering around the $50 mark in an oversupplied market, low energy prices were putting the brakes on a more expedient return to normal inflation levels. Compared to a year ago, the average price of heating oil, gasoline or diesel has dropped by 5.7 percent, according to Germany's federal statistics office.

The confluence of low inflation and rising wages in Germany has been a boon for private consumption, where indexes of consumer confidence have risen to their highest level in 13 years.

A weak euro, tempered by the European Central Bank's massive bond-purchasing scheme that this month began flooding eurozone markets with freshly printed money, has also boosted German exports as manufacturers find it easier to sell their goods abroad.

Not everything has gotten cheaper, the statisticians noted. The average cost of renting an apartment was up 1.3 percent on the year, while companies were also charging 1.2 percent more for services due to the introduction here of a formal minimum wage of 8.50 euros ($9.21) an hour.

cjc/hg (Reuters, AFP)

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