German Inflation Slows To 1.6% In December

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….as ECB moves to curb stimulus

German inflation slowed in December, underscoring the challenge the European Central Bank will face next year as it gradually removes its stimulus programme.

Consumer prices rose an annual 1.6 percent, the Federal Statistics Office said on Friday. While that’s slower than November’s 1.8 percent, it’s above the 1.4 percent median forecast in a Bloomberg survey of economists.

A news report by Bloomberg indicated that Inflation had remained tepid in the country even as record-low unemployment bolsters private consumption and a recovery in global trade fuels exports and investment.

The Bundesbank this month lifted its projections for growth in Europe’s largest economy through 2019 and said it expected momentum to remain strong over the coming year. It sees inflation accelerating to 1.9 percent in 2020.

The news medium reported further that German number came a week before data for the euro area, where consumer-price gains are expected to slow to an annual rate of 1.4 percent.

The ECB has already warned that inflation will slow temporarily in the coming months before accelerating again later in 2018.

It would be recalled that earlier this month, President Mario Draghi, stopped short of declaring that the inflation goal will be met in 2020, although he expected underlying price pressures to rise gradually over the medium term as the euro-area economy enjoys its best growth in a decade.

The ECB will next month halve its monthly pace of asset purchases to 30 billion euros ($36 billion) and continue buying until at least September.

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