Reuters: Market News: States point to slower German inflation in March

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States point to slower German inflation in March Mar 28th 2012, 09:36 BERLIN, March 28 | Wed Mar 28, 2012 5:36am EDT BERLIN, March 28 (Reuters) - Consumer price growth eased in five German states in March, pointing to slower nationwide inflation after an unexpected jump last month and likely giving the European Central Bank some breathing space on interest rates. Annual inflation slowed in North Rhine-Westphalia (NRW), Saxony, Baden-Wuerttemberg, Hesse and Brandenburg, figures from the states' statistics offices showed on Wednesday. Preliminary pan-German inflation data due out later in the day is based on figures from six out of 16 states that together account for more than half of the country's population. In NRW, Germany's most populous state and a bellwether for the national inflation rate, prices rose by 1.8 percent compared with a 1.9 percent increase in February. Both readings are in line with the ECB's target for price stability of close to but just under 2 percent. For much of last year, price growth in Europe's largest economy held euro zone inflation consistently above the ECB target, presenting the bank with the dilemma of balancing monetary policy for the strong German economy and its weaker euro zone peers. But German inflation has since eased and the ECB held rates at 1.0 percent for a third month running in March, with prospects of a cut this year also fading amid tentative signs of stabilisation in the euro zone economy. A Reuters poll of economists forecast German inflation at 2.2 percent in March, based on a month-on-month reading of 0.3 percent and compared with an annual 2.3 percent in February. An alternative measure that harmonises consumer prices to compare with other euro zone countries (HICP) and is favoured by the ECB, is forecast to slow to 2.3 percent in March from 2.5 percent in February. Link this Share this Digg this Email Reprints

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