German Consumer-Price Slump Worsens as ECB Readies Stimulus

Germany’s consumer-price slump unexpectedly worsened in November, adding to the case for additional monetary stimulus from the European Central Bank.

The inflation rate dropped to -0.7% from -0.5%, the steepest decline in more than a decade. Economists had forecast a slight improvement. Inflation in Europe’s largest economy has been negative since August as a result of a sales-tax cut the government introduced to spur consumption.

German Consumer-Price Slump Worsens as ECB Readies Stimulus

Prices are also falling across much of the euro area as pandemic-related restrictions curb activity. Figures earlier on Monday showed inflation at -0.9% in Spain and -0.3% in Italy. A reading for the 19-nation region due Tuesday is forecast to show a year-on-year decline of 0.2%.

ECB policy makers officials have flagged they are prepared to offer more monetary support at their Dec. 10 meeting amid concerns about the inflation outlook. President Christine Lagarde has already singled out the ECB’s emergency bond-buying program and ultra-cheap loans for banks as go-to tools.

©2020 Bloomberg L.P.

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