Energy prices push German inflation to highest level in four decades By Reuters

© Reuters. FILE PHOTO: A general view of a fruit and vegetable stand at a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse

BERLIN (Reuters) – German inflation hit its highest level in more than four decades in April, pushed higher by oil products whose prices have risen dramatically since Russia’s attack on Ukraine.

Consumer prices, harmonized to make them comparable to inflation data for other European Union countries (HICP), rose 7.8% a year, compared to 7.6% in March, the report announced on Thursday. Federal Statistical Office.

The inflation reading in Germany, the euro zone’s largest economy, ahead of Friday’s data for the entire bloc of 19 countries. Eurozone inflation hit a record high in March.

A Reuters poll of analysts had indicated an overall annual German HICP reading of 7.6% in April.

According to the statistics office, the last time such a high rate of inflation was recorded in Germany was in the fall of 1981, following the first Gulf War.

“The hoped-for slight easing of inflationary pressures, which seemed tangible given the drop in oil prices, has yet again failed to materialize,” said LBBW bank analyst Elmar Voelker.

For the European Central Bank, “this reads like another clear request to finally give up its hesitations in terms of exiting its ultra-loose monetary policy,” Voelker added.

ECB Vice President Luis de Guindos said on Thursday that the central bank should closely monitor the recent rise in inflation expectations above its 2% target.

A key indicator of long-term inflation expectations in the euro zone stood at 2.4% around its highest level in a decade.

Energy prices pushed up costs, with producer prices in March – the first month to reflect the war in Ukraine – posting the biggest year-on-year jump since records began in 1949, heralding bad news for consumer inflation.

The German government forecasts an inflation rate of 6.1% in 2022 and 2.8% next year, citing the effects of energy prices in Europe’s biggest economy, the ministry said on Wednesday. economy.

James R. Rhodes