German inflation unexpectedly accelerated in March on oil

April 12, 2011, 2: 42 pm EDT by Christian Vits

(Updates with prices of energy in the fifth paragraph).

April 12 (Bloomberg) - German inflation unexpectedly accelerated the fastest rate in two and a half in March after the energy prices jumped.The inflation rate, calculated using method Union European harmonised increased 2.3% 2.2 in February, the Federal Office of statistics in Wiesbaden, said today, revision of its estimate of 2.2 per cent on March 29. It is the highest since October 2008. In January, consumer prices increased by 0.6%, or more than 0.5% of reading initial.Soaring energy costs are fueling inflation while also booming exports and reduced the growth of unemployment in Germany boost, Europe's largest economy. The price of oil on April 8 has failed to $113 a barrel for the first time in over two years, increasing pressure on firms to pass on higher costs. "The European Central Bank last week raised its interest rate of reference by 25 points to 1.25% base"."German inflation risks are strongly biased to the upside in the coming months," said Klaus Baader, co-leader Societe Generale in London euro-zone Economist. "The rate can reach 2.8% in the summer." The ECB will certainly remain concerned by the prospects for inflation.The Bureau of statistics said heating oil prices soared by 32.8% in the year and 8.1% in the month. Cost of 11.2% over a year earlier, while food prices rose 2.2 per cent of fuel. If the fuel and energy of the households were excluded, the rate of inflation would be 1%, the Bureau said.InflationCrude of the euro in the price of oil rose by almost 30% over the past two months in political tensions in the Middle East and North Africa. The ECB, which aims to maintain the rate just below 2%, is concerned that wage increases to offset higher energy prices can consolidate more rapid inflation.In the euro region 17-nation, inflation quickened to 2.6% in March of 2.4% in February, according to an initial estimate of the Statistical Office of the European Union. He will present its final report on the April 15. ECB decision makers follow increase the rate of the week last with 25 basis point steps every three months, taking the cue point to 1.5% in July and 1.75% in October according to the median of 20 estimates in a Bloomberg News survey. The pattern will continue in 2012 with increases in each quarter, so that the key rate is 2.75% before the end of next year, the survey shows.On a basis not harmonized, German inflation remained at 2.1% in March, also a maximum of two years."Alexander Koch, an economist at UniCredit in Munich, then said he reduced unemployment should boost German consumption this year, rising prices threaten"inconvenience"and outlook"."The uphill struggle in the climate of consumption between the excellent labour market prospects and concerns rising inflation will continue," he said.

-Editors: Matthew Brockett, Jeffrey Donovan

To contact the reporter on this story: Christian Vits to Frankfurt to cvits@bloomberg.net

To contact the editor responsible for this story: Craig Stirling cstirling1@bloomberg.net

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