German inflation unexpectedly decreased in February, as reported by the statistics office on Friday, suggesting a revision of euro zone figures that could pave the way for additional policy easing by the European Central Bank.
Preliminary data indicated that German inflation dropped to 2.6% in February, with the harmonized annual inflation rate compatible with other European Union countries holding steady at 2.8%.
Chief economist at Hamburg Commercial Bank, Cyrus de la Rubia, commented, "This is good news for the ECB," while urging caution due to the possibility of prices escalating in a trade conflict scenario. Specifically, he stated that a more robust defense by the EU against U.S. and Chinese imports could lead to a surge in goods prices.
The Eurozone's inflation decreased to 2.4% in February according to the EU's statistics agency's initial estimates. Consequently, estimates from Pantheon Macroeconomics now indicate that Eurozone inflation dropped to 2.3% in February, with final data scheduled for release on Wednesday.
In Germany, inflation was driven by a sharp rise in food prices in February, coupled with significant increases in service prices, whereas energy prices exerted a downwards pressure on inflation.
Additionally, the monthly inflation rate was revised slightly downward from an initial 0.6% to a final reading of 0.5%, with no explanation provided by the office for the revision of the harmonized inflation data.