German Inflation Accelerated More Than Forecast in November

(Bloomberg) --

German inflation picked up more than expected in November to a five-month high, an encouraging sign for European Central Bank policy makers.

Consumer prices rose 1.2% from a year earlier, compared with estimates for an acceleration to 1.1%. The improvement reflects higher costs for food and services, which offset a drag from energy and a month-on-month slump in package holidays.

While the report hints at a gradual strengthening of underlying price pressures in Germany and the broader euro area, inflation remains still way below the ECB’s goal of just under 2%. Economist expect a reading for the 19-nation region on Friday to come in 0.9%.

Policy makers have failed to tether inflation firmly to its goal despite a decade of unprecedented stimulus that included negative interest rates and quantitative easing. The latest attempt in September to double down on monetary support came amid rising concerns about the detrimental side-effects of those instruments.

They have also riled German savers and raised the specter of pension cuts in the Netherlands. The ECB is likely to take stock of its experience when it starts a policy review early next year under new president Christine Lagarde.

--With assistance from Kristian Siedenburg and Harumi Ichikura.

To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, Craig Stirling

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