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German import price inflation rises

FRANKFURT: German import price inflation jumped to its highest rate in almost 20 years in January and regional consumer prices rose 2.1 percent, but analysts said the gains were unlikely to provoke a euro-zone interest rate rise.

Import prices were up 9.2 percent year-on-year, the highest level since December 1981, and rose 0.8 percent month-on-month as a result of surging oil prices and the weak euro. Stripping out the price of oil and oil products, import prices were up 0.6 percent month-on-month and up 3.9 percent year-on-year, the Office said.

Consumer inflation also rose, with February data for the German state of Hesse showing a 2.1 percent rise in the consumer price index year-on-year and a 0.3 percent rise month-on-month. The Hesse data, together with figures from five other German states due to be released next week, are used to calculate preliminary German consumer price inflation, also due next week.

Economists said the figures were unlikely to be a cause of concern for the European Central Bank.

"The numbers are not worrisome as import prices are routinely very volatile. The annual rate will come down from the current high level from about March onwards as the base effect will taper off from then," said Christoph Hausen at Commerzbank AG.

"The European Central Bank does not need to worry about further imported inflation as the euro should not continue to fall against the dollar.

"The past depreciation is already priced into the inflation rates and by year's end we see the euro back at $1.15."

Harald Finger at Deutsche Bank Research said price increases for raw materials and the weakness of the euro would undoubtedly show up in the inflation rates during the first quarter, but a rate rise by the ECB was unlikely at the its next council meeting on Thursday.

"Recent comments by (ECB Vice-President Christian) Noyer and (Bundesbank council member Klaus-Dieter) Kuehbacher indicated that there would be no move next week," Finger said.

"Should the euro fall further against the dollar, the risk for a rate hike this week increases, however".-Reuters