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FRANKFURT: German inflation picked up slightly in January, preliminary data showed Thursday, as the impact of a one-off energy subsidy the month before wore off.

Consumer prices accelerated by 8.7 percent year-on-year, federal statistics agency Destatis said, up from 8.6 percent in December.

The increase was smaller than expected, with analysts surveyed by FactSet predicting price growth of 8.9 percent.

Destatis was initially scheduled to release its January data last week, but delayed the publication over an “unexpected technical problem”.

As a result, the EU’s statistics office Eurostat was forced to use an estimate for Germany when it released the eurozone inflation rate.

Eurostat calculated that inflation in the 20-nation currency club had eased for a third straight month, to 8.5 percent, but uncertainty hung over the figure.

“The increase published today is the missing piece of the puzzle,” said KfW chief economist Fritzi Koehler-Geib.

“Although the peak has probably been passed, it is premature to sound the all-clear,” she said.

“While pressures from energy prices will decline in perspective, service and industrial goods prices are gaining in importance this year.”

Russia’s invasion of Ukraine a year ago pushed up food and energy costs across Europe, sending inflation soaring.

German economy weathering hard winter but risks loom

The German government unveiled a 200-billion-euro energy support package to cushion the impact, including a subsidy in December covering the gas bill for households and businesses.

The package also includes a cap on electricity and gas prices starting this year.

Energy prices have declined sharply recently, partly thanks to mild winter weather, a race to diversify supplies and energy-saving efforts.

Although this has helped bring eurozone inflation down from a peak of more than 10 percent in October, price pressures remain high.

The European Central Bank has raised interest rates at an unprecedented pace since July to bring inflation back down to its two-percent target.

ECB President Christine Lagarde said last week that the bank would hike rates by a further 50 basis points in March.

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