German inflation rose to 2.4 percent in May, its highest rate in more than two years, in a move likely to inflame debate over whether ultra-loose monetary policy in Europe could overheat Europe’s largest economy. Region.
On Monday, the Federal Statistics Agency said the harmonized consumer price index reached a level last seen in October 2018, mainly due to a 10 percent year-on-year increase in energy prices.
Conservative commentators in Germany have long feared hyperinflation and worried that the ECB’s loose monetary policy is causing the cost of living to rise. The Bundesbank expected monthly inflation to reach 4 percent later this year.
German inflation has risen faster than in most other eurozone countries since the start of the year, driven by a reversal of a temporary German value-added tax cut, a new carbon tax and a rebalancing of the basket of products used to calculate prices.
Earlier on Monday, Spain’s statistics agency said its inflation rate jumped from 2 percent in April to 2.4 percent in May, mainly due to higher energy prices. In the same period, Italian inflation rose from 1 percent to 1.3 percent, the country’s National Statistics Institute said.
Eurozone price growth figures will be published on Tuesday. Economists polled by Reuters had expected inflation in the bloc to rise from 1.6 to 1.9 percent in May. That would be in line with the European Central Bank’s target of just under 2 per cent, but policy makers are expected to keep monetary policy unchanged when they meet next week.