Inflation up in four key German states in April

Inflation rose in four important German states in April, preliminary data showed today, suggesting that national inflation could halt its downward trajectory and rebound slightly this month.

In Bavaria, the inflation rate rose to 2.5% in April from 2.3% in March, in Brandenburg it rose to 3% from 2.8%, in Saxony it rose to 2.7% from 2.5%, and in Hesse it rose to 1.9% from 1.6%.

The inflation rate in North Rhine-Westphalia, Germany’s most populous state, remained unchanged from the previous month at 2.3% in April. In Baden-Wuerttemberg it fell to 2.1% from 2.3%.

Economists polled by Reuters forecast Germany’s harmonised inflation rate at 2.3% in April, unchanged from March.

Economists will pay close attention to national inflation data later today, as Germany publishes its figures before the euro zone inflation data release, expected tomorrow.

Spain also published inflation data today with the consumer price index rising to 3.4% from 3.3% in the previous month.

Euro zone inflation is expected to remain at 2.4%, unchanged from the previous month, according to economists polled by Reuters.

In Germany, slightly more companies than in the previous month intend to raise their prices in April, according to a survey by the Ifo institute published today.

“Inflation is unlikely to fall any further in the coming months and is set to remain at just over 2%,” said Sascha Moehrle, economic expert at the Ifo Institute.

Deutsche Bank expects a modest increase in German inflation in April to 2.4%.

The expected pick-up in inflation is mainly driven by higher energy prices, DB’s economists said.

These have arisen from the scheduled re-increase in the VAT rate on gas and district heating, which is effective since April 1, and the oil-price driven rise in motor fuel price, they added.