German inflation above ECB target in March

BERLIN, (AFP) - Higher energy and food prices drove inflation in Germany to 2.1 percent in March compared to the same period last year, above the European Central Bank’s two-percent threshold, data showed on Tuesday.

Energy prices in Europe’s top economy were 10.5 percent higher than at the same time last year, the Destatis statistics office said, as oil prices shoot up due to ongoing unrest in the Middle East and North Africa.

Vegetables and fruit, non-alcoholic drinks and staples such as butter and oil also rose sharply in price, the statistics showed.

The year-on-year inflation rate was stable compared to February. On a month-on-month basis, prices were 0.5 percent higher than last month. The data confirmed a preliminary estimate made at the end of March.

On Thursday, the ECB hiked interest rates from their record lows for the first time since mid-2008, citing concerns about rising inflationary pressure.

ECB President Jean-Claude Trichet however dampened fears that the rate increase was the first of many, although analysts expect the central bank will have to tighten the screw further to contain price pressures in the euro area.