German inflation accelerated more than initially reported in May as the cost of oil surged.
Consumer prices, based on a harmonized European Union method, increased 3.1 per cent from a year earlier, the Federal Statistics Office in Wiesbaden said today.
That's more than a first estimate of 3 per cent from May 28th. From April, prices rose 0.7 per cent.
Oil prices reached a record $139.12 a barrel last week, pushing up inflation in Germany and across the economy of the 15 euro nations and eroding consumers' spending power.
European Central Bank President Jean-Claude Trichet said last week that the ECB may raise its benchmark rate by a quarter-point to 4.25 per cent next month to contain inflation.
"Oil and food prices are driving up inflation," said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. "We might see even higher rates in the coming months. That argues for an ECB interest rate hike in July."
German inflation has exceeded the ECB's limit of a rate "close to but below 2 per cent" for more than a year as the euro's appreciation failed to offset higher oil and food costs.
While the euro rose 8 per cent in trade-weighted terms over the past year, oil prices doubled.
The price of fuels rose as much as 12 per cent from a year earlier. Diesel jumped 26 per cent and the cost of light heating oil surged 57 per cent in May, the statistics office said. Food prices rose 7.9 per cent compared with May 2007.