German consumer prices set to ease, economists say after CPI data

Headlince consumer prices in Germany jumped past the European Central Bank's definition of price stability in February, but were set to ease over coming months and quarters, economists said.

The cost of living in Germany, as mesaured by the country's harmonised consumer price index, advanced at a 2.2% year-on-year pace last month, from 1.9% in January, according to the Federal Office of Statistics.

That was in line with preliminary estimates and economists' forecasts.

An acceleration in energy price gains to an annualised clip of 3.3% was the main culprit, as a 43.8% year-on-year surge in the cost of heating oil pushed the rate of advance in energy prices up from the 2.8% pace observed in January.

Nevertheless, base effects should see energy inflation back down in the coming months, said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Food inflation as a result of cold weather in Southern Europe - which acted as a 'supply' shock - should also diminish in coming months, he said.

"We think headline inflation in Germany will ease to about 1.5% in the next three-to-six months."

At the 'core' level, which excludes oft-volatile food and energy prices, CPI was ahead by 1.3% last month, versus 1.2% in January, as the cost of services offset gains in goods prices.

"Overall, we think core inflation pressure in Germany are building steadily, and that the core rate will hit 1.5%-to-1.6% towards the end of the year."