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Germany's inflation set to pick up pace in March, provisional data show

Harmonized consumer prices in Germany are expected to increase by 1.5% year on year in March, provisional data from the Federal Statistical Office indicate.

The country's inflation slowed for the fourth consecutive month to 1.2% in February.

Compared to the previous month, harmonized consumer prices are anticipated to rise 0.4% in March.

"As the Easter vacation break this year started in March and not in April as last year, this seasonal effect is the main driver behind the stronger annual data," Carsten Brzeski of ING Research said.

Germany's consumer price index is projected to edge up by 1.6% on an annual basis in March, and by 0.4% on a monthly basis. Food price inflation is expected to accelerate to 2.9% year on year, while services prices are projected to increase by 1.8% in March.

"At first glance, stronger German inflation data looks like a welcome argument for ECB hawks as it seems to confirm their view that prices are finally accelerating," Brzeski added. "However, on second glance German inflation data is actually providing further evidence that even in the cyclically most advanced economy of the Eurozone, a wage-price-spiral is hardly noticeable."