Oil price stokes German inflation By Bettina Wassener in Frankfurt Published: November 24 2000 11:32GMT | Last Updated: November 24 2000 13:25GMT

German producer prices in October offered further evidence of the impact of high oil prices on inflation. Data for October,released on Friday, showed the fastest year-on-year increase for 18 years, at 4.6 per cent, and exceeded market expectations.

The Federal Statistics Bureau's figures showed that producer prices excluding energy prices also edged up, with a 0.5 per cent month-on-month increase, and a 3.3 per cent rise year-on-year in October, up from 0.3 and 3.0 per cent respectively in September.

The outlook for November is slightly more positive. November CPI figures from Germany's consituent regions have been coming in throughout this week. These indicate that consumer prices are likely to have increased 2.4 per cent year on year, unchanged from October, due to the relative stabilisation of energy prices during the month. A pan-German preliminary figure is expected to be released shortly.

Nevertheless, euro-zone inflation as a whole remains persistently above the European Central Bank's 2 per cent target, with only a gradual decline foreseen. The European Commission this week said it expected euro-zone inflation to average 2.3 per cent this year and 2.2 per cent in 2001, falling to 1.9 only in 2002. Rising import prices driven by the weakness of the euro and the high oil prices

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-- Martin Thompson (mthom1927@aol.com), November 24, 2000