Inflation in four German states indicates modest national rise, eyes on Euro Zone figures

Germany inflation: Inflation edged up in four significant German states during April, according to preliminary data released on Monday, indicating a potential halt to the national decline in inflation and hinting at a modest rebound for the month.

The data revealed that in Bavaria, the inflation rate increased to 2.5 per cent in April from 2.3 per cent in March. Similarly, in Brandenburg, it rose to 3.0 per cent from 2.8 per cent, while in Saxony, it climbed to 2.7 per cent from 2.5 per cent. In Hesse, inflation ticked up to 1.9 per cent from 1.6 per cent. However, in North Rhine-Westphalia, Germany's most populous state, the inflation rate remained steady at 2.3 per cent in April. Conversely, in Baden-Wuerttemberg, it decreased to 2.1 per cent from 2.3 per cent.

Economists surveyed by Reuters anticipate that Germany's harmonised inflation rate will hold steady at 2.3 per cent in April, mirroring the March figure.

The forthcoming release of Germany's national inflation data is keenly watched by economists, as it precedes the euro zone inflation data due on Tuesday.

Spain also disclosed its inflation figures on Monday, reporting a rise to 3.4 per cent from 3.3 per cent in the preceding month. Euro zone inflation is projected to remain unchanged at 2.4 per cent, as per economists surveyed by Reuters.

Insights from a survey by the Ifo Institute, released on Monday, suggest that a slightly higher number of companies in Germany intend to hike their prices in April compared to the previous month.

"Inflation is unlikely to fall any further in the coming months and is set to remain at just over 2 per cent," remarked Sascha Moehrle, an economic expert at the Ifo Institute.

Deutsche Bank anticipates a modest uptick in German inflation for April, forecasting a rate of 2.4 per cent. The bank's economists attribute this expected increase primarily to higher energy prices, stemming from the scheduled VAT rate hike on gas and district heating effective since April 1, along with the oil-price-driven rise in motor fuel prices.

(With Reuters inputs.)