German Inflation Beats Estimates as Travel, Energy Costs Jump

Germany’s annual inflation rate has exceeded the 2% target set by the European Central Bank for the first time since November. An economic slowdown and higher travel and energy costs are part of the cause.

Inflation in Germany accelerated at the fastest pace in five months in April on the back of rising travel and energy costs. According to preliminary data released by Germany’s Federal Statistics Office (Destatis) on Tuesday, consumer prices in the euro area rose by 2.1% year-on-year after an increase of 1.4% in the previous month.

Data showed a jump in the cost of package holidays, a side effect of this month’s Easter holiday that’s likely to unwind in May. Energy prices also increased.

European Central Bank President Mario Draghi has argued that progress in hitting the institution’s inflation goal of just under 2 percent has been delayed rather than derailed. Unemployment unexpectedly declined in March, underpinning policy makers’ claims that a tightening labor market will eventually push wages higher.

The report raises the prospect that inflation in the 19-nation euro area due on Friday will exceed estimates. Data showed Europe’s economy began 2019 with an unexpected growth spurt. Italy emerged from recession, Spain expanded more than forecast and France maintained momentum thanks to strong consumer spending. Germany will report first-quarter data on May 15.


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