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German inflation rate rises to 2.2 percent in November

AFP
AFP - news@thelocal.de
German inflation rate rises to 2.2 percent in November
Coins lie on a receipt. Photo: picture alliance/dpa | Hannes P Albert

German inflation rose slightly in November, climbing back above the European Central Bank's two-percent target, according to preliminary data released Thursday.

The annual inflation rate in Europe's biggest economy increased to 2.2 percent, up from two percent in October, figures from federal statistics agency Destatis showed.

The rebound in inflation was widely anticipated but lower than the 2.3-percent rate predicted by analysts surveyed by financial data firm FactSet.

ECB policymakers had also predicted eurozone inflation, of which the German figures are a major component, would rise again going into 2025.

But the central bank for the 20 countries that use the euro has said it still expects the rate to edge back towards two percent over the following months.

READ ALSO: What's behind the rise of inflation in Germany?

The bump in the inflation outlook has not deterred the central bank from lowering interest rates in recent months.

From a high of four percent, reached in the wake of soaring inflation caused by the coronavirus pandemic and Russia's invasion of Ukraine, the ECB has lowered its key deposit rate to 3.25 percent.

The Frankfurt-based institution is expected to lower rates again at its next meeting in December amid signs of weakness in the eurozone economy.

The increase in the German inflation rate was "mainly the result of less favourable energy base effects", ING bank analyst Carsten Brzeski said.

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The rate could remain at a level that was "slightly too high" for a while longer as wages continued to increase, Brzeski said.

The November figures could discourage some ECB decision makers from seeking to implement a 50-basis-point rate cut in December and lean instead towards a smaller quarter-point cut, he said.

READ ALSO: The products and services getting more expensive in Germany right now

"Even more important... is the question of how far the ECB will eventually go with rate cuts" beyond December, Brzeski said.

Inflation in Spain also accelerated in November, hitting 2.4 percent due to higher fuel and electricity prices after reaching 1.8 percent in October, official data showed Thursday.

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