German inflation eases on lower energy prices in January

German inflation rose to 1.3 per cent in January from a year earlier. Economist had expected a rise to 1.5 per cent from 1.4 per cent in November.

Month-on-month, the consumer price index decreased 0.6 per cent. Estimates were for a 0.4 per cent fall after November’s 0.4 per cent increase.

The relatively low rate is mainly down to the fall in energy prices this month, says the German statistics agency Destatis.

Harmonised to EU prices, inflation was at 1.2 per cent in December from a year earlier (expected at 1.3 per cent), declining 0.7 per cent month-on-month.

Christian Schulz of Berenberg says that German core inflation is likely to move gradually higher, as the labour market gathers more pace.

Stable energy prices will keep inflation low, giving households plenty of room to spend.

With economic data showing the consumer confidence and willingness to spend it growing, he says: "German consumers should make a strong contribution to overall GDP growth in 2014 and should be a pillar of growth for the Eurozone periphery as well via imports."