Germany’s gamble with a sharp rise in value-added-tax this month appeared on Tuesday to have paid off with inflation rising by significantly less than expected. However, the impact on consumer spending and growth remains unclear.

Inflation in January rose to 1.8 per cent in January, from 1.4 per cent in December on a harmonised eurozone basis, according to federal statistics office figures based on data from six German states. The latest figure was below expectations and significantly lower than feared in the run-up to the controversial VAT increase, from 16 per cent to 19 per cent.