Ashton Whiteley Comments - German Unemployment Down, Inflation Up

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As German inflation continues to rise, Ashton Whiteley economists say Bundesbank president may argue for reduction in ECB stimulus.

Ashton Whiteley economists reported a rise in German inflation in February while unemployment figures fell more than anticipated this month.

Largely due to more costly food and energy, inflation in the eurozone’s largest economy reached its highest level in almost five years in February.

German consumer prices increased by 2.2 percent from the previous year, 0.3 higher than in January and well above the European Central Bank’s target.

Ashton Whiteley economists say it was the highest yearly rate of inflation in four and a half years and that core inflation increased to 1.3 percent from 1.2 percent the month before.

With federal elections due to take place in September, Ashton Whiteley economists believe that the inflation data will add fuel to the debate regarding the withdrawal of the ECB’s monetary stimulus.

The European Central Bank has cut interest rates and implemented a bond purchasing program valued at 2.3 trillion euros in a bid to push funds into the region’s economy.

An ongoing recovery in German inflation gives Jens Weidmann, president of the Bundesbank and an ECB policy maker, reason to call for a reduction in the bond-buying scheme. Weidmann has often made known his critical view of the program.

Concerns over the impact of the ECB stimulus has been exacerbated by warnings from the German central bank that properties in bigger German cities are up to 30 percent overpriced.

In February, the number of unemployed fell more than anticipated. The number fell to 2.592 million and, adjusted for seasonal factors, reached its lowest level in almost three decades.

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Jeff Wang
Market Watch Asia
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