2018.05.3022:39:00UTC+00German Inflation Rebounds in May on Higher Energy Prices

German consumer price inflation jumped in May to reach the highest level in over a year, data showed, surpassing the European Central Bank's rate target of just under 2 percent for the eurozone as a whole.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, increased by 2.2 percent year-on-year after a rise of 1.4 percent in the previous month, the Federal Statistics Office said.

Energy prices increased at an annual rate of 5.2 percent, driven by a sharp rise in the price of crude oil. “A major reason for the increase in the inflation rate is the price development for liquid fuels (heating oil and motor fuels),” Destatis said.

Food prices were also up markedly, to a year on year pace of 3.5 percent.

“German headline inflation won't surge from here, but it could nudge a bit higher in coming months, before easing into year-end,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

The stronger-than-expected inflation figures are likely to play into the hands of policy hawks, including Bundesbank head Jens Weidmann, who want the ECB to end its asset purchases this year and see room for a rate hike towards the middle of 2019.