German inflation slows sharply as ECB dials back stimulus

BERLIN (Reuters) – German annual inflation slowed sharply in December, slipping below the European Central Bank’s target level just as it ended a crisis-fighting bond purchase scheme after four years and as global markets slumped.

German consumer prices, harmonized to make them comparable with inflation data from other European Union countries, rose by 1.7 percent year-on-year after an increase of 2.2 percent in the previous month, the Federal Statistics Office said on Friday.

A Reuters poll had suggested the annual harmonized consumer price inflation (HICP) rate would slow to 1.9 percent.

The ECB targets inflation of close to but below 2 percent for the euro zone as a whole. December’s weaker German annual inflation rate was marked by a pronounced slowdown in energy price rises.

On the month, EU-harmonized prices rose by 0.3 percent, the preliminary numbers showed, compared with the forecast for a 0.4 percent increase.

In a precarious balancing act, the ECB earlier this month formally ended its 2.6 trillion euro ($2.98 trillion) bond-buying scheme but promised to keep feeding stimulus for years into an economy struggling with an unexpected slowdown and political turmoil.

The ECB said on Thursday the global economy is set to slow down in 2019 and stabilize thereafter, but it still expected prices to rise.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.