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German inflation set to remain below ECB target in March, state data suggests

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German inflation set to remain below ECB target in March, state data suggests
FILE PHOTO: A woman passes sale signs in a shop window in downtown Hamburg, Germany, January 25, 2018. REUTERS/Fabian Bimmer/File Photo   -   Copyright  Fabian Bimmer(Reuters)
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BERLIN (Reuters) – Inflation remained below the European Central Bank’s target in German states in March, data showed on Thursday, lending support to the central bank’s decision to delay a rate increase until next year.

The ECB aims to keep inflation in the euro zone close to, but just below, 2 percent a year. After the ECB’s rate-setting meeting earlier this month, President Mario Draghi said headline inflation was likely to remain around current levels before declining towards the end of the year.

Earlier this month the ECB put off plans to “normalise” policy, instead providing banks with even more liquidity and delaying a rate increase until next year. On Wednesday Draghi said the ECB could further delay a rate hike.

A poll conducted before the release of the regional data suggested German consumer price inflation, harmonized to compare with data from other European Union countries, would slow to 1.6 percent from 1.7 percent.

That would put it below the ECB’s target for a fourth month running.

In North Rhine-Westphalia (NRW), Germany’s most populous state, consumer price inflation slowed to 1.5 percent from 1.6 percent. Price pressures eased in some states and held steady in others.

The state inflation readings, which are not harmonised to compare with other euro zone countries, feed into nationwide preliminary inflation data due at 1300 GMT.

Economists expect euro zone inflation – due to be published on April 1 – to hold steady at 1.5 percent in March.

(Reporting by Michelle Martin; Editing by Raissa Kasolowsky)

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