German inflation ups in April as food prices rise

German inflation rose slightly in April, attributed to increased food prices and a less significant drop in energy prices than in previous months, according to preliminary data released on Monday by the federal statistics office.

Harmonised consumer prices in Germany, for comparison with other European Union countries, saw an increase from 2.3 per cent year-on-year in March to 2.4 per cent in April.

Economists closely watch German inflation data, released ahead of the broader eurozone figures, with Tuesday’s eurozone inflation expected to hold steady at 2.4 per cent, mirroring last month’s rate, according to a Reuters survey.

The European Central Bank has indicated a clear intention to begin reducing borrowing costs in June. Meanwhile, core inflation in Germany, which excludes fluctuating food and energy prices, decreased to 3.0 per cent in April from 3.3 per cent in March.

Commerzbank forecasts that the core inflation rate will stabilise around current levels, particularly as service sector companies pass on significant wage cost increases to their customers.