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German March inflation surpasses ECB target

German March inflation surpasses ECB target 1

BERLIN (Reuters) – Higher energy prices and supply chain disruptions pushed Germany’s annual consumer price inflation in March above the European Central Bank’s target of close to but below 2%, Federal Statistics Office data showed on Tuesday.

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 2% from 1.6% in February.

Non-harmonised consumer price inflation accelerated to 1.7% in March and a breakdown of the data showed that an almost 5% jump in energy prices was the main driver.

The coronavirus pandemic and lockdowns to contain it have made many goods and services unavailable, which contributes to a distortion of consumer price data.

But analysts said the trend was up, pointing to several factors like the termination at the end of last year of reduced valued added tax rates.

“With supply chain disruptions, like higher container prices, delivery problems with semiconductors and most prominently, the recent problems in the Suez Canal, producer prices are set to increase further, possibly putting more pressure on consumer prices,” said Carsten Brzeski of ING.

“In our view, German headline inflation could eventually range between 3% and 4% in the second half of this year,” he added.

(Writing by Joseph Nasr; Editing by Madeline Chambers)

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