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Germany: inflation rises, unemployment falls


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Germany: inflation rises, unemployment falls

Inflation in Germany rose in February, reaching its highest level in four-and-a-half years, mainly due to more expensive energy and food.

Consumer prices in the eurozone’s largest economy were up by 2.2 percent from a year ago, above the European Central Bank’s price stability target and up from January’s 1.9 percent.

It was the highest annual inflation rate since August 2012.

Core inflation – which strips out volatile fresh food and energy costs – was up 1.3 percent, an increase from January’s 1.2 percent.

See a full breakdown here

Bundesbank backlash

With federal elections set for September in Germany, the inflation figures are likely to fuel debate about an end to the European Central Bank’s stimulus through a loose monetary policy.

The ECB has slashed interest rates and adopted a bond-buying programme worth 2.3 trillion euros to pump money into the region’s economy.

A sustained rebound in German inflation gives Bundesbank President and ECB rate setter Jens Weidmann more grounds to argue for a reduction in the bond-buying programme, a scheme that he has often criticised.

The German central bank has warned that homes in large German cities are 15 to 30 percent overpriced, in a message that stoked further fears about the side-effects of the ECB’s stimulus.

German unemployment falls

Unemployment in Germany dipped in February by more than expected.

The jobless total fell by 14,000 to 2.592 million. That was the figure adjusted for seasonal factors like weather.

The adjusted unemployment rate remained unchanged at 5.9 percent of the workforce, the lowest since German reunification in 1990.

“The labour market continues to develop positively,” Frank-Juergen Weise, head of the Federal Labour Office, said.

“The number of people without work narrowed in February, insurable employment lies significantly higher than last year’s level and demand by businesses for new workers remains at a high level,” he added.

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