Inflation in Europe’s largest economy Germany eroded further in September, official data showed Monday, weeks after the European Central Bank announced new measures to stoke price growth.
Consumer prices grew 1.2 percent year-on-year, down from 1.4 percent in August and 1.7 percent in July, federal statistics authority Destatis said in a statement.
Measured using the ECB’s preferred yardstick — the Harmonised Index of Consumer Prices — inflation was even feebler, at 0.9 percent.
“The supertanker inflation is steadfastly holding course for the one-percent mark… in the longer run, inflation in Germany is expected to be even lower in the face of a weak economy,” commented economist Sebastian Wanke of KfW public investment bank.
Growth and inflation in the eurozone have been undermined by trade conflicts and other economic and geopolitical upsets like Brexit, despite years of support from the central bank.
Germany is believed by many observers to be in the midst of a technical recession — or two successive quarters of negative growth — with weak prospects for the rest of 2019 and into 2020.
At its September meeting, the ECB turned to familiar levers in its toolkit of “unconventional” measures, saying it would lower a key interest rate further into negative territory and restart “quantitative easing” (QE) government and corporate bond purchases.
Policymakers hope to boost lending, economic activity and price growth with the moves, although “hawks” on the governing council believe conditions are not yet bad enough to justify the renewed intervention.
So stormy was the meeting on September 12 that German central bank chief Jens Weidmann blasted the decisions in a newspaper interview the day after, while ECB board member Sabine Lautenschlaeger resigned last week.
ECB president Mario Draghi on Monday reiterated that governments should spend more to help central bankers boost growth and inflation.