German inflation hits three-year high in December, good news for ECB

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[January 03, 2017]  BERLIN (Reuters) - German inflation rose more than expected in December, hitting the highest level in more than three years, preliminary data showed on Tuesday, a welcome sign for the European Central Bank that price pressures in Europe's biggest economy are pushing up.

A woman checks vegetables at the Biocompany organic supermarket in Berlin, January 31, 2013. REUTERS/Fabrizio Bensch

German consumer prices, harmonized to compare with other European countries (HICP), rose by 1.7 percent on the year after an increase of 0.7 percent in November, the Federal Statistics Office said.

This was the highest annual inflation rate since July 2013 and stronger than a Reuters consensus forecast of 1.3 percent.

On a non-harmonized basis, German annual inflation picked up to 1.7 percent after 0.8 percent in November.

Rising energy prices and higher food costs were the strongest drivers behind the overall increase, a breakdown of the non-harmonized data showed.

A strong recovery in German inflation would give conservatives like Bundesbank's President and ECB rate-setter Jens Weidmann more scope to argue for winding down the ECB's bond-buying program more quickly.

(Reporting by Michael Nienaber; Editing by Joseph Nasr)

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