German consumer prices in September likely to hit 16-month high, state data shows

Consumer price inflation in Germany is likely to surge to a 16-month high in September, picking up more than market expectations, according to a set of regional data released Thursday that delivered an encouraging sign for the European Central Bank that price pressures are reviving in Europe's biggest economy.

Preliminary data from six German states on Thursday, including the two most populous states of North Rhine-Westphalia and Bavaria, showed that annual inflation had clearly accelerated in September. Consumer prices rose by 0.8 percent on the year in Bavaria and by 0.7 percent in North Rhine-Westphalia, Saxony, Brandenburg and Baden-Wuerttemberg. They edged up by 0.6 percent in Hesse.

The surprisingly strong German figures came after Spanish European Union-harmonized consumer prices rose by 0.1 percent year-on-year in September, the first increase since May 2014. For the overall euro zone, economists polled by Reuters expect the inflation rate, due on Friday, to edge up to 0.4 percent in September after a rise of 0.2 percent in August.

Still, growth in the euro zone remains moderate and the 19-member currency bloc has been struggling with little or no inflation, due mainly to a plunge in oil prices. The ECB expects the bloc-wide figure to stay below its target of just under 2 percent for some years despite its monetary stimulus, Reuters reported.