German inflation rate turns positive

Frankfurt - German inflation unexpectedly climbed above zero in March in a sign that domestic demand and European Central Bank (ECB) stimulus may be starting to spur price gains.

Consumer prices rose 0.1% from the prior year, data from the Federal Statistics Office in Wiesbaden showed on Wednesday, based on a European Union-harmonised calculation. That’s higher than the median estimate of zero in a Bloomberg survey of economists and compares with a rate of minus 0.2% in February. Prices rose 0.8% from the previous month.

Budding inflation in Europe’s largest economy will come as welcome news to monetary-policy makers, who are trying to fuel price pressures in the 19-nation eurozone. ECB President Mario Draghi announced additional stimulus in March, the latest stage in the central bank’s war to offset weak demand and global headwinds.

Before the German report, economists projected that eurozone inflation stood at minus 0.1% in March, compared with a minus 0.2% reading the prior month. Eurostat will release those figures on Thursday.

In March, the ECB predicted inflation in the region would accelerate to 1.3% in 2017 and 1.6% in 2018. The goal is to reach medium-term inflation of just under 2%.