Inflation down in German states, pointing to national decline

By Maria Martinez

BERLIN (Reuters) -Inflation fell in six economically important German states in March, preliminary data showed on Tuesday, suggesting that national inflation will continue its downward trajectory.

Economists will pay close attention to national inflation data later on Tuesday, as Germany publishes its figures before the euro zone inflation data release, expected on Wednesday.

The inflation rate in North Rhine-Westphalia, Germany’s most populous state, fell to 2.3% in March from 2.6% in February.

In Bavaria, the inflation rate also fell to 2.3% from 2.6% in February, while in Brandenburg it declined to 2.8% from 3.5%, in Saxony to 2.5% from 3.0%, in Baden-Wuerttemberg to 2.3% from 2.7%, and in Hesse to 1.6% from 2.1%.

Economists polled by Reuters forecast Germany’s harmonised inflation at 2.4% in March, down from 2.7% in February.

German companies’ price expectations fell in March to their lowest level in three years, with inflation set to fall below the European Central Bank’s target in the coming months, the Ifo institute said on Tuesday.

The European Central Bank (ECB) has raised interest rates by the most in the euro’s history to bring inflation down from double-digits.

ECB chief Christine Lagarde said in March the eurozone’s inflation rate is set to keep falling, while economic growth will start picking during the year.

Euro zone inflation is expected at 2.6% in March, unchanged from the previous month, according to economists polled by Reuters.

A growing number of ECB policymakers have supported rate reductions, with a June meeting shaping up as the most likely time for action, although there is also a meeting scheduled for this month.

(Reporting by Maria Martinez; Editing by Rachel More and Sonali Paul)


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