BERLIN, June 28 German annual inflation probably
accelerated in June, moving towards the European Central Bank's
target of close to but just below 2 percent for the whole euro
zone and possibly even exceeding it, data from four federal
states suggested on Friday.
Inflation in Germany has remained below the ECB's target
this year after spending much of last year above it.
In North Rhine-Westphalia (NRW), Germany's most populous
state and a bellwether for the national data, annual inflation
picked up to 2.1 percent on the year in June, largely due to
higher food and education costs.
That is much higher than the 1.7 percent mid-range forecast
in a Reuters poll for the pan-German figure, which is due out at
1200 GMT and is based on data from the federal states.
Christian Schulz, senior economist at Berenberg Bank, said
the 0.2 percent monthly rise in consumer prices in NRW pointed
to German annual inflation accelerating to 1.9 percent.
It also suggested the figure harmonised to compare with
other European Union countries - the measure closely watched by
the ECB - would pick up to 2 or 2.1 percent, he said.
"Core inflation in Germany, outside very volatile components
like food and energy, is likely to have a very gradual tendency
to rise because wages are rising so strongly and unemployment is
so low," he said, adding that cheaper imports from euro zone
states would however exert downward pressure.
German workers have secured hefty wage raises of up to 6.6
percent this year and the jobless rate remains close to its
lowest since Germany reunited more than two decades ago.
A Reuters poll expected consumer prices to remain unchanged
on the month. The poll showed consumer prices harmonised to
compare with other EU countries were likely to remain unchanged
on the month and to accelerate to 1.8 percent on the year.