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German inflation dips to negative for first time since 2009

Xinhua, January 29, 2015 Adjust font size:

Annual inflation rate in Germany dipped to a negative territory in January for the first time in more than five years, official data showed on Thursday.

Compared with a year earlier, German consumer prices decreased by 0.3 percent in January, German statistical office Destatis said, adding that it was the first time that Germany saw a negative inflation rate since September 2009 when the global financial crisis was at its height.

According to Destatis, the drop was mainly due to falling oil prices. In January, energy prices in Germany slumped by 9 percent year on year. Food prices, meanwhile, also declined by 1.2 percent.

When measured by harmonized consumer price index (HCPI), European Central Bank's yardstick, German annual inflation in January fell to minus 0.5 percent in January, following a HCPI growth of 0.1 percent in December last year.

The price development in Europe's biggest economy was clearly below ECB's target of 2 percent. Economists expected that January inflation in the euro zone, which was scheduled to be released on Friday, would fall to minus 0.5 percent, and vindicate ECB's large scale money printing program announced last week.

Ignoring opposition from Germany, ECB decided to inject over one trillion euros (about 1.13 trillion U.S. dollars) into market by purchasing government bonds and other securities from March 2015 until end September 2016.

According to ECB President Mario Draghi, the program could be extended until the inflation rate in the euro zone was in a sustained path back towards the central bank's medium-term maintenance target of below, but close to, 2 percent. Endit