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More signs of inflation building in Europe’s largest economy.
Wholesale inflation – a measure of costs faced by German food retailers – jumped to its highest level in more than five years at the start of 2017 as rising food and energy costs lift prices across the continent.
Germany’s year on year wholesale inflation accelerated from 2.8 per cent to 4 per cent in January – its annual highest level since late 2011 (see chart above).
Overall consumer price inflation in Germany hit a more than three-year high of 1.9 per cent last month, while producer prices – a measure of costs faced by manufacturers – has surged to a 2012-high at 1 per cent (see chart below).
Building inflationary momentum has drawn fresh German criticism of the European Central Bank’s stimulus measures, with the country’s hawkish economic establishment calling on policymakers to make a quick exit from their quantitative easing policies.
The ECB is expected to begin a scale back of its monthly bond-buying from April this year and will continue its purchases until at least December.
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