FRANKFURT AM MAIN: Inflation in Germany, Europe's largest economy, slowed in February, official data showed Tuesday, complicating the picture for the European Central Bank as it eyes an exit from its easy-money policy.
The annual rate of inflation stood at 1.4 percent this month, down from 1.6 percent in January, according to preliminary data published by the federal statistics authority, Destatis.
Using the Harmonised Index of Consumer Prices (HICP) -- the ECB's preferred yardstick -- German inflation stood at just 1.2 percent in February, compared to 1.4 percent last month.
The ECB's inflation target for the euro area as a whole is an annual rate of close to, but just below 2.0 percent.
In a bid to coax inflation higher, the ECB has embarked on a series of unprecedented policy measures, buying almost 2.3 trillion euros ($2.8 trillion) of government and corporate bonds, offering cheap loans to banks and setting interest rates at record lows.
While the economic effects of the measures have indeed led to higher growth and lower unemployment across the 19-nation single currency area, higher inflation has remained out of reach.
Policymakers and analysts have pointed fingers at different possible explanations.
Some have highlighted the euro's strength against the dollar, while others note that unemployment remains relatively high across the eurozone at 8.7 percent -- although the German figure is at a historic low of 5.4 percent.
Observers believe the lower unemployment goes, the more power workers will have to bargain for higher wages -- as seen in Germany this month, when metalworkers struck a deal for a 4.3-percent salary increase.
More generous pay is the "linchpin" for higher inflation, ECB President Mario Draghi has said.
"If even an economy with low unemployment and nominal wage increases is not providing inflation numbers of at least around 2.0 percent, how will the rest of the eurozone ever be able to do so?" asked ING Diba bank analyst Carsten Brzeski.
"Recent speculations in financial markets about a possible inflation surge... look increasingly premature," he added.
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