LDN - Business

Inflation in parts of Germany exceeds ECB target in September

[September 28, 2017] BERLIN (Reuters) - Inflation in some German regions edged above the ECB's target rate in September, data showed on Thursday, pointing to healthy consumer demand and feeding into a debate about when the bank might curb its stimulus program.

Policy hawks at the European Central Bank, led by Germany, want it to scale back its asset purchases relatively quickly while doves favor a gradual withdrawal.

In the state of Hesse, annual inflation rose to 2.1 percent from 1.8 percent in August, and it was 2 percent on the year in Saxony.

The ECB, which is expected to decide this autumn - most probably in October - whether to curb its stimulus from next year, targets an inflation rate of just under 2 percent.

In Germany's most populous state, North Rhine-Westphalia, inflation was unchanged at 1.9 percent. It was also unchanged at 1.8 percent in Bavaria and in Baden-Wuerttemberg at 1.9 percent.

The state readings, which are not harmonized to compare with other euro zone countries, feed into nationwide inflation data due at 1200 GMT.

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

A Reuters poll conducted before the release of the regional data suggested EU-harmonized consumer price inflation ticked up nationwide to 1.9 percent in September from 1.8 percent in August.

That would maintain a consistent pattern of German inflation running above the euro zone average.

Preliminary data for the whole bloc is due on Friday and should show a rise to 1.6 percent from 1.5 percent in August, according to a Reuters poll.

The German economy grew by 0.7 percent on the quarter between January and March and by 0.6 percent in the second quarter, driven by household and state spending as consumers and authorities reap the benefits of record-low borrowing costs and a low unemployment rate.

Spanish data showed earlier on Thursday that annual consumer price inflation inched down to 1.9 percent in September.

(Reporting by Joseph Nasr; editing by John Stonestreet)

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