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German inflation rose to 2.4% in May, the highest rate in more than two years, in a move that will intensify the debate over whether the ultra-loose European monetary policy could cause a warming of the region’s largest economy.
The federal statistics agency said on Monday that the harmonized consumer price index had reached its final level in October 2018, mainly due to a 10 per cent rise in energy prices.
Conservative German commentators have long feared it and are concerned that the ECB’s loose monetary policy is raising the cost of living. The Bundesbank predicts that monthly inflation could rise by 4 per cent this year.
German inflation has risen faster than in most other eurozone countries since the start of the year, driven by a temporary reduction in Germany’s value-added tax, a new carbon tax and a re-weighting of the basket of products used to calculate prices.
Earlier Monday, the Spanish statistics agency said the inflation rate rose from 2% in April to 2.4% in May, mainly due to high energy prices. Over the same period, inflation in Italy rose from 1 percent to 1.3 percent, the country’s national statistics institute said.
Data on eurozone price growth will be released on Tuesday. Economists surveyed by Reuters expect inflation in the bloc to rise from 1.6% to 1.9% in May. That would be in line with the European Central Bank’s target of less than 2 percent, but its officials expect monetary policy to be unchanged when they meet next week.
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