Germany: Inflation deviates a little further from the ECB’s target

Germany: Inflation deviates a little further from the ECB’s target
Germany: Inflation deviates a little further from the ECB’s target

GERMANY: INFLATION STRIPS A LITTLE FURTHER FROM THE ECB’S OBJECTIVE

BERLIN (Reuters) – Inflation in Germany accelerated again in May and widened the gap between it and the target set by the European Central Bank (ECB), shows Monday the first estimate published by Destatis , the Federal Statistical Office.

The consumer price index calculated according to European HICP standards is up 0.3% compared to April and 2.4% over one year. Economists polled by Reuters on average expected an increase of 0.3% over one month and 2.5% year-on-year.

The ECB’s chief economist, Philip Lane, said recently that the institution had “a lot to do” to bring inflation back to its target (a rate slightly below 2% over a year) and added that speculation market on the supposed acceleration of price increases were misplaced.

Inflation across the euro area is currently approaching 2%, its highest level in years, thanks to the impact of massive monetary and fiscal measures implemented since the onset of the coronavirus crisis. A development which has led some observers to predict a new period of inflation.

Philip Lane rejects this hypothesis, arguing that it will take years for the labor market to return to its pre-crisis situation, for corporate balance sheets to remain weak and for the economy to rebound still largely dependent on policies. carried out by the ECB and the member states of the euro zone.

The Governing Council of the ECB is due to meet on June 10 and could debate on this occasion the advisability of a gradual reduction in its support in view of the economic upturn and the lifting of health restrictions.

“The ECB should not be disturbed by short-term fluctuations in the inflation rate and the return to normalcy of its policy will be slow,” predicts Holger Schmieding, chief economist at the Berenberg bank.

(Paul Carrel and Rene Wagner, French version Marc Angrand, edited by Jean-Stéphane Brosse)

Source

Germany Inflation deviates ECBs target

 
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