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German Inflation Slowed More Than Expected in March

German Inflation Slowed More Than Expected in March

(Bloomberg) -- Inflation in Germany was weaker than expected in March as policy makers in the euro area grappled with a lack of consistent price pressures even after years of stimulus.

Consumer prices rose an annual 1.4 percent, missing a median forecast of 1.6 percent in a Bloomberg survey.

Inflation data for the 19-nation euro area are due on Monday, and economists expect the headline figure will remain stable at 1.5 percent. The core rate -- which excludes the impact of volatile components like energy and food -- will probably stay at 1 percent, close to its average level over the past decade.

German Inflation Slowed More Than Expected in March

While European Central Bank officials recently lowered their outlook for inflation -- placing them even further from their goal of just below 2 percent -- President Mario Draghi said Wednesday that progress has been “delayed rather than derailed.” The labor market, he said, is the major driver of consumption and has been resilient to the slowdown.

Germany, Europe’s largest economy, currently has the lowest unemployment rate since the country’s reunification, yet some surveys signal that a manufacturing shock is beginning to take a toll on the labor market. Employment at factories fell for the first time in three years this month.

Still, when the country’s Labor Agency publishes its March jobs report on Friday, it’s expected to show another decline in the number of people out of work.

--With assistance from Kristian Siedenburg, Catarina Saraiva and Harumi Ichikura.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow

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