Annual inflation accelerated in four German states in December as fuel costs rose strongly, data showed, pointing to firmer price pressures in the broader euro zone. Prices from German states provide the first insight into trends across the euro area, where annual inflation was 0.5 percent in November and is expected to show a reading of 0.9 percent for December.
Preliminary data from the German states of North Rhine-Westphalia (NRW), Hesse and Brandenburg - all released on Tuesday - showed annual consumer prices accelerating. The three states showed annual rises in fuel costs of between 12 percent, in NRW, and 13.5 percent, in Brandenburg.
Joerg Zeuner at VP Bank said upward pressure from rising energy and raw materials costs would not last long. "Oil prices only reached their low at the start of 2009, therefore inflation overall is rising," he said. "During 2010, however, inflation rates will fall - as soon as the basis effect of the price movements for energy in 2009 are corrected."