Inflation in Europe's top economy Germany dropped back in November but remained above the European Central Bank's target of just under two percent for a seventh month. Prices rose 2.3 percent year-on-year, preliminary data from federal statistics authority Destatis said, down from a 2.5 percent increase in October.
The rate was in line with predictions of analysts surveyed by data company Factset. Measured using the ECB's preferred yardstick, the Harmonised Index of Consumer Prices (HICP), inflation fell to 2.2 percent - still well above the central bank's target. The slowdown in price rises was due to a sharp drop in food product inflation from 1.9 percent to 1.4 percent.
But the rate remained comparatively high overall because of a rise in gasoline prices in Germany. ING Diba economist Carsten Brzeski said that, while crude oil prices have fallen since the summer, gasoline prices are up some five percent - mostly because a dry summer and low river levels have sparked logistical problems.
He predicted, however, that "once lower oil prices finally reach German households, headline inflation should fall back under the two-percent-mark in the first months of 2019". The inflation data will feed the debate in Germany where many would like to see the ECB accelerate the exit from its massive monetary stimulus programme by year's end.
After more than three years the Frankfurt institution plans to halt its mass purchases of government and corporate bonds, known as quantitative easing (QE), designed to pump cash through the financial system and into the hands of firms and households. Brzeski said that given uncertain growth prospects and low underlying inflationary pressure in the eurozone, "the ECB will be happy that the December meeting is not too far away and that it can bring net QE purchases to an end before discussions about an extension could flare up again."