Frankfurt - German inflation accelerated to the fastest pace in three and a half years in January, providing ammunition for critics of the European Central Bank’s stimulus measures.
Consumer prices rose 1.9% from a year ago, data from the Federal Statistics Office showed on Monday. That’s up from 1.7% the previous month and the highest rate since July 2013, though below the median estimate of 2% in a Bloomberg survey. Prices slid 0.8% from December.
The surge in German inflation since the end of last year is a potential political flashpoint in the country, which faces elections in September, as savers remain burdened with near-zero deposit rates.
Calls are mounting for the ECB to start talks over winding down its bond-buying program, which is scheduled to run until at least the end of this year, though policy makers have generally urged caution until it’s clear price increases are being sustained in the eurozone as a whole.
“Monetary policy can’t just cater to one country but to the entire eurozone economy,” Ewald Nowotny, governor of Austria’s central bank said on Monday in Vienna before the data were published. “German developments are watched, but they are just a part.”
Nowotny said that while the ECB’s Governing Council will “surely” have to take a decision on the future of quantitative easing before the end of 2017, he doesn’t expect that to happen until after the summer.
ECB President Mario Draghi said this month that Germans should demonstrate patience as the region’s recovery solidifies, noting that there are “no convincing signs” yet that underlying inflation is picking up.
At the same time, Executive Board member Sabine Lautenschlaeger and Bundesbank President Jens Weidmann have signaled that the time is near to start a discussion about how to gradually normalize policy, and German Finance Minister Wolfgang Schaeuble has warned that the ECB’s stance could cause “political problems.”
German inflation, calculated using a national measure, was led by a 5.8%gain in energy costs, the statistics office’s report showed. Goods prices climbed 2.7% and services rose 1.2%.
Inflation in the eurozone probably accelerated to 1.5% in January from 1.1% the previous month, a separate Bloomberg survey shows. Eurostat will release those figures on Tuesday.