German inflation highest in 13 years

Dec 28, 2007, 15:42 GMT

   Wiesbaden, Germany - Germany's annual inflation rate climbed to 2.2 per cent in 2007, the highest since 1994, according to official figures released Friday.

Bigger than usual price increases for energy and fuel as well as for many food products were major contributing factors to the higher rate, the Federal Statistics Office said.

Last year, the inflation rate was 1.7 per cent.

   In December, consumer prices were up 2.8 per cent from the same month a year ago, according to provisional figures based on returns from six of Germany's 16 federal states.

This represented a slight slowdown from November when the annual inflation rate climbed to 3.1 per cent, breaking the 3 per cent barrier for the first time in 13 years.

Annual inflation stood at 2.4 per cent in October.

   However, since then food, commodity and energy prices have continued to exert an upward pressure on inflation.

On a month-by-month basis, consumer prices in December rose 0.5 per cent from November. Officials attributed this to higher spending on gifts, food and holidays during the Christmas period.

   Signs of renewed inflationary pressures have come amid evidence that global growth is slowing, helping to fuel concerns that the world economy could be facing a period of stagflation.

   Added to this has been the economic uncertainty unleashed by the US housing market crisis.

'We expect inflation to remain high during the moths ahead,' European Central Bank chief economist Juergen Stark told Saturday's edition of the stock exchange newspaper, Boerse Zeitung.