Germany’s consumer price inflation climbed to its highest level in six months in January, driven by energy prices, while unemployment decreased unexpectedly, boosting hopes of stabilization at the start of the year.
The consumer price index rose 1.7 percent year-on-year following a 1.5 percent increase in December, flash estimates from the Federal Statistical Office showed on Thursday. Economists had forecast 1.6 percent inflation.
The latest inflation rate was the highest since July, when it was at 1.7 percent.
Food price inflation accelerated to 2.3 percent from 2.1 percent. Energy prices jumped 3.4 percent after falling in the previous few months.
On a month-on-month basis, the CPI declined 0.6 percent in January. Economists had expected a 0.7 percent fall.
The harmonized index of consumer prices, or HICP, rose 1.6 percent year-on-year after a 1.5 percent increase in the previous month. Economists had forecast 1.7 percent inflation.
The HICP inflation was the highest since April, when it was 2.1 percent.
The EU measure of inflation decreased 0.8 percent from the previous month. Economists were looking for a 0.7 percent decline.
Based on data from the federal states, Commerzbank estimated that core inflation rate, which excludes energy and food, fell 1.5 percent in January from 1.7 percent in December.
“Underlying inflation in Germany is expected to pick up somewhat in the coming months,” Commerzbank economist Marco Wagner said.
“Companies are likely to pass on the increasing wage pressure to consumers, at least in part.”
Commerzbank expects collective wages to grow almost 3 percent in 2020.
Earlier on Thursday, data from the Federal Employment Agency showed that the number of people out of work decreased by 2,000 from the previous month, confounding expectations for an increase of 5,000 in January. Unemployment totaled 2.277 million.
The unemployment rate remained unchanged at a near record low 5 percent in January, in line with economists’ expectations.
The economic weakness continues to leave its mark on the job market, Federal Employment Agency CEO Detlef Scheele said. However, it is robust at the beginning of the year, the official added.
Data released from Destatis, earlier on Thursday, showed that the ILO jobless rate for Germany held steady at a seasonally adjusted 3.2 percent in December.
According to the Labor Force Survey, around 1.40 million people were unemployed in December, which was an increase of 78,000 people compared with the same month a year earlier.