German Inflation Beats Estimates as Travel, Energy Costs Jump

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Inflation in Germany accelerated at the fastest pace in five months in April on the back of rising travel and energy costs.

Consumer prices in the euro area’s largest economy rose an annual 2.1 percent, exceeding the 1.7 percent median forecast in a Bloomberg survey. Breakdowns of regional data showed a jump in the cost of package holidays, a side effect of this month’s Easter holiday that’s likely to unwind in May. Energy prices also increased.

The report raises the prospect that inflation in the 19-nation euro area due on Friday will exceed estimates. Before the German number, economists had predicted a jump in the rate to 1.6 percent, the highest since November, with a measure excluding volatile components reaching 1 percent.

European Central Bank President Mario Draghi has argued that progress in hitting the institution’s inflation goal of just under 2 percent has been delayed rather than derailed. Unemployment unexpectedly declined in March, underpinning policy makers’ claims that a tightening labor market will eventually push wages higher.

Reports earlier on Tuesday showed Europe’s economy began 2019 with an unexpected growth spurt. Italy emerged from recession, Spain expanded more than forecast and France maintained momentum thanks to strong consumer spending. Germany will report first-quarter data on May 15.

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