Breaking News
Investing Pro 0
Donate to earthquake relief efforts in Turkey and Syria Donate

German inflation eased in November but too soon for 'all-clear'

Economy Nov 29, 2022 09:56AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Customers at the Edeka grocery store buy pasta, as the spread of coronavirus disease (COVID-19) continues in Duesseldorf, Germany, April 29, 2020. REUTERS/Wolfgang Rattay/File Photo GLOBAL BUSINESS WEEK AHEAD
 
CBKG
+0.33%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NYF
+1.55%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Miranda Murray and Balazs Koranyi

BERLIN (Reuters) - Germany's inflation cooled slightly in November, but remained near a record high, suggesting that while cost pressures have eased in Europe's largest economy they are unlikely to weaken the European Central Bank's resolve to tame prices.

German consumer prices, harmonised to compare with other European Union countries, rose by 11.3% on the year in November, preliminary data from the Federal Statistics Office showed on Tuesday, in line with forecasts by analysts polled by Reuters.

October saw the highest reading since comparable data going back to 1996, with harmonized inflation up 11.6% on the year.

Compared with October, prices were unchanged, the office added. Analysts had forecast a 0.1% month-on-month rise.

The annual increase was due to higher costs for food and energy, which have grown considerably since the war in Ukraine began and have had a substantial impact, the office said.

Graphic: Inflation breakdown https://graphics.reuters.com/GERMANY-ECONOMY/INFLATION/znpnbemnjpl/chart.png

Energy prices eased slightly in November but were still up 38.4% compared with the same period last year, while food prices had increased by 21%, according to the office.

"It is too early to sound the all-clear because many utilities have announced significantly higher electricity and gas prices for January," said Commerzbank (ETR:CBKG) chief economist Joerg Kraemer, who added that November inflation eased only because prices for fuel and heating oil had calmed down somewhat.

"Underlying inflation excluding energy and food is likely to remain stubbornly high in 2023," said Kraemer.

A one-off payment for household energy bills in December and a planned price cap on gas and electricity has helped stabilize consumer sentiment, but the Bundesbank has warned that these relief measures may not be enough to bring inflation down from the double digits.

Graphic: Marginally lower https://graphics.reuters.com/GERMANY-ECONOMY/INFLATION/xmvjkoyekpr/chart.png

Lower inflation in Germany and Spain are likely be reflected in November euro zone inflation data to be published on Wednesday, with economists polled by Reuters expecting it to edge down to 10.4% in a flash reading after a record 10.6% on an annualised basis last month.

Such a small step down is unlikely to change ECB President Christine Lagarde's assessment that euro zone inflation has not yet peaked, which likely dampened speculation that the ECB was about to take a gentler path with future rate increases.

The small drop, however, is likely to fuel the argument of dovish policymakers who argue that it is time for the ECB to slow down rate hikes and proceed more cautiously as it is getting to a point where it restricts growth.

The ECB has increased its rate on bank deposits by a record 200 basis points to 1.5% in three months to dampen demand in a bid to lower price growth.

Markets in recent weeks have been swinging back and forth between pricing a 50 and a 75 basis point hike from the ECB on Dec. 15, but the peak in the deposit rate is still seen at around 3%, suggesting another 150 basis points of hikes.

Adding to the case for caution at the ECB, euro zone economic sentiment rebounded more than expected in November, a separate indicator showed on Tuesday, suggesting that the bloc's recession will be shallow and unlikely to significantly curb price pressures.

German inflation eased in November but too soon for 'all-clear'
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Stephen Fa
Stephen Fa Nov 29, 2022 9:08AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
There is nothing cool about 11% inflation.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email