German CPI rises as expected in March, amid firmer trend in core prices
Consumer prices in the Eurozone's largest economy picked-up as expected last month, on the back of a slightly higher trend for core inflation.
Germany's Consumer Price Index rose by 0.4% month-on-month in March, pushing the year-on-year rate of gains from 1.4% to 1.6%, according to the Ministry of Finance.
That was in-line with both economists' forecasts and the preliminary estimate from government statisticians.
In comparison to a year ago, the biggest gains were to be seen in the prices for Alcoholic Beverages and Food, at up by 3.7% and 2.9% year-on-year, respectively.
The cost of housing and utilities meanwhile was 1.5% higher and that of Recreation and Culture by 1.8%.
Yet the sharpest increases were recorded in prices for Education and Restaurants and Hotels, which climbed by 2.8% and 2.3% each.
At the 'core' level meanwhile, prices advanced at a 0.5% month-on-month clip and were ahead by 1.6% year-on-year.
Claus Vistesen at Pantheon Macroeconomics explained that the underlying pattern was one of higher services prices, driven by Easter demand for airfares and accommodation, offset by less expensive clothing and shoes.
In month-on-month terms on the other hand, clothing and footwear prices were 5.2% higher, with the cost of package holidays up by 2.0%.
On a harmonised basis, euro area CPI was up by 0.4% on the month and 1.5% year-on-year, which was also as expected, versus a rate of advance of 1.2% in the month before.
"Overall, we think both headline and core inflation in Germany will edge higher in coming months. At 1.6% the core rate is not far off where it peaked in previous business cycles, but we see risks that strong growth and a record-low unemployment this time around will push it towards 2% in the next 12 months," Vistesen said.
"The German core rate is volatile, but it appears to have stabilised on a slightly higher trend in the past 12 months compared to earlier in the business cycle."