The Federal Statistical Office said Friday that consumer
inflation in Europe’s largest economy ran at an annual 2.1 percent in February.
The increase was unexpected after the government had forecast a 2 percent rate
based on preliminary figures.
The rise in consumer prices was driven by large increases in
energy prices, which were up 10.2 percent compared with February 2010. Food
prices were also up 3.4 percent compared with the same month the year before.
The inflation rate was only 0.6 percent a year ago, and sat
at 1.3 percent in October 2010 when it began to rise.
More ominously, wholesale prices rose 10.8 percent in
February over the same month last year, the highest annual jump since October
1981. Agricultural raw materials such as grain and animal feed rose 82.9
percent and wholesale prices for coffee, tea and spices rose 46.4 percent.
Wholesale fruits and vegetables jumped 13.5 percent.
Not all those increases will necessarily be passed on to the
consumer, but signs of rising inflation in Europe led the European Central Bank
last week to indicate it may raise interest rates soon in an attempt to keep
inflationary expectations from creating a wage-price spiral. The bank’s goal is
to keep inflation just under 2 percent.
Higher interest rates are the bank’s chief tool against
inflation. Its key rate has been at a record low of 1 percent since May 2009 to
support growth during the past several years of economic and financial turmoil.
Economic growth has lead to fears that Germany’s workers
will begin raising their wage demands. On Thursday night, Germany’s
public-employees union Ver.di struck a wage agreement for 585,000 workers that
kept increases in the wage scale to under 2 percent, winning 1.5 percent from
April 1 and 1.9 percent next year.
Employees will get one-time top-up payments that mean they
effectively get 2.3 percent and 2.55 percent, keeping them roughly even with
inflation without building all of the increase into the permanent wage scale.
