Finland Times

 

Photo AFP-Lehtikuva

Annual inflation rate in Germany slumped to the lowest level in more than five years in December 2014, German statistical office Destatis said on Monday, raising pressure on the European Central Bank to launch unconventional stimulating measures.

     

Compared with a year earlier, consumer prices in Germany increased by 0.2 percent in December 2014, said Destatis, attributing the weak inflation to energy prices which dropped by 6.6 percent year on year.

     

In November 2014, the annual inflation measured by consumer prices index (CPI) dipped to 0.6 percent after remaining stable at 0.8 percent for four months.

     

A lower rate of inflation was last record in October 2009 when the yearly growth of consumer prices stood at 0.0 percent, according to Destatis.

     

When measured by harmonised index of consumer prices (HICP), European Central Bank's yardstick, German annual inflation dropped to 0.1 percent in December from the 0.5 percent in the previous month.

     

The German data came as the euro slumped to its lowest level in 9 years early on Monday.

     

Investors' eyes were focused on the latest inflation data in the euro zone which was scheduled to be released on Wednesday and the late-January parliamentary election in Greece where a party opposing the austerity measures was expected to lead the poll.

     

Inflation rate in the euro zone was down to 0.3 percent in November 2014 from the 0.4 percent in October. Economists and officials included ECB Vice President Vitor Constancio expected that the common currency area would saw a negative inflation in the coming months.

     

In an interview with German financial daily Handelsblatt published last Friday, ECB President Mario Draghi warned that risks of low inflation in the euro zone was higher than six months ago, hinting that the central bank was ready to use large scale unconventional measures at the start of 2015 as reaction.

   

Analysts speculated that quantitative easing by purchasing governments' bonds would be included in Drgahi's options.