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German inflation accelerated to a nine-month high at the start of 2020 amid mounting signs that the economy started to stabilize.
The rate climbed to 1.6% in January, slightly below economists’ expectations. The pickup follows reports showing German unemployment unexpectedly fell this month and European manufacturers turned more optimistic.
The figures will be welcomed by the European Central Bank, which has struggled for years to keep euro-area inflation just below 2%. President Christine Lagarde said last week there were indications of a moderate increase in underlying price pressures.
Improvements on the inflation front are underpinned by a brightening economic outlook. Trade tensions have eased after the U.S. and China signed a deal, and Germany’s government this week raised its forecasts for the year.
Yet, risks remain. U.S. levies on European products are still a threat, and the outbreak of the coronavirus in China could yet impact global growth.
The latest data for total output and inflation in the euro area will be released on Friday.