Germany’s Annual CPI Inflation Rate Remains Thesame

German inflation unexpectedly remained unchanged in November, data showed on Tuesday, in a sign price pressures are still weak in Europe's biggest economy, despite an economic upturn spurred by the European Central Bank's ultra-loose monetary policy.

Consumer prices, measured according to harmonized European Union standards, were unchanged on the month, but 0.7% higher than in November last year, Germany's Destatis statistics office said Tuesday.

The stubbornly low inflation in Europe’s largest economy might concern ECB policy-makers as they assess risks to the region’s outlook. At their next meeting on December 8th they will debate whether €1.7 trillion of asset purchases will be enough to return euro-area inflation to below but close to 2 per cent – a level not reached in more than three years – or if more stimulus is needed.

Compared to the previous month, the CPI edged up 0.1% in November, after a 0.2% gain in October. Both figures were in line with economists' expectations.

Energy prices declined 2.7% annually after a 1.4% slump in the previous month. Food prices rose 1.2% after remaining unchanged in October.

The harmonized index of consumer prices rose HICP 0.7% year-on-year, same as in the previous month. The rate was also the highest since October 2014, when the measure climbed 0.8%.

On a month-on-month basis, the HICP was unchanged in November after a 0.2% increase in October.

"The main reason for this is that energy prices rose less than expected, but this will change soon," DZ Bank economist Michael Holstein said, adding that negative base effects of falling oil prices would fade out in the comings months.

"We expect German annual inflation to reach 1.0 percent in December and possibly 1.5 percent at the beginning of next year," Holstein said, pointing to rising rents as one of the strongest inflation drivers in Germany.

Recent figures on business confidence and output suggest that German economic momentum remains robust. The Bundesbank said last week that growth would likely pick up considerably in the final three months of the year, after a temporary slowdown in the third quarter.

The fortunes of Germany are key to the recovery of the euro area where economic expansion is stuck at mediocre levels and risks remain on the downside.

The region’s inflation rate rose to 0.6 per cent in November from 0.5 per cent the previous month, according to a separate Bloomberg survey. Eurostat will publish that report on Wednesday.

With economic recovery still fragile and political uncertainties growing, the ECB is widely expected to announce after its meeting next week that its asset-purchase program will be extended beyond March 2017.