German Inflation Slowed in March After Oil Prices Collapsed

(Bloomberg) -- German inflation slowed to its weakest pace in four months on the back of an oil-price slump.

The weak reading, which matched economists’ expectations, shows price growth was slowing even before Europe’s largest economy experienced the full impact of restrictions the government put in place to stem the coronavirus pandemic.

Inflation was 1.3% in March, down from 1.7% a month earlier, the statistics office said on Monday. Price growth for goods and services slowed.

The shutdown of broad sections of the economy is likely to push Germany into its worst recession since the 2009 global financial crisis. The government’s economic experts estimate output could shrink as much as 5.4% this year if measures aren’t lifted in mid-May.

Until then, price pressures will probably ease further as public gatherings remain forbidden, and schools, business and restaurants are closed.

The government has stepped in with a 750 billion-euro ($830 billion) support package that promises to do its utmost to protect workers. The European Central Bank will spend more than 1.1 trillion euros in bonds and other assets to tide over the euro-area economy.

Eurostat will release inflation data for the 19-nation region on Tuesday.

©2020 Bloomberg L.P.