German inflation hits two-year high

Berlin: Inflation in Germany accelerated to the fastest in more than two years in January, led by higher costs for food and energy.

The inflation rate, calculated using a harmonized European method, increased to 2% after rising an annual 1.9% in December, the Federal Statistics Office said, confirming an initial estimate published on January 27.

That’s the fastest since October 2008. In the month, consumer prices fell 0.5% after rising 1.2% in December.

German companies have stepped up hiring and output to meet both increasing export orders and reviving domestic demand, fuelling the economy’s fastest expansion on record last year.

With unemployment at the lowest in almost two decades, companies may find it easier to pass on higher energy costs just as labour unions seek to push through more pay.

“There have been some commodity-price increases, but they are not yet visible in the core rate,” said Gebhard Stadler, an economist at BayernLB in Munich. “The German economy is looking very good at the moment.”