Inflation in Germany, Europe's largest economy, slowed in April as an early Easter led to a drop in prices on package holidays and vacation accommodation.
The inflation rate, based on a harmonized European Union method, declined to 2.6 per cent from 3.3 per cent in March, the Federal Statistics Office in Wiesbaden said today, confirming an April 28th, estimate. From a month ago, prices fell 0.3 per cent.
Soaring energy and food costs have driven up consumer prices in Germany and the other 14 euro nations, prompting unions to demand bigger wage increases.
Worldwide, food prices in March were 57 per cent higher than a year earlier, according to the United Nations, and oil prices hit a record $126.98 a barrel this week.
The ECB is concerned that faster inflation will feed into wage demands and prompt companies to pass on higher costs. The bank, which aims to keep the rate of consumer-price increases in the euro region just below 2 per cent, currently predicts inflation will average about 2.9 per cent this year.
"Maintaining price stability in the medium term is our primary objective," ECB President Jean-Claude Trichet said last week after the bank left its benchmark rate at a six-year high of 4 per cent.
"The firm anchoring of medium to longer-term inflation expectations is of the highest priority."