German inflation dropped 0.4 pct in January

Consumer prices in Germany fell more than estimated in January, as demand declined due to seasonal factors.

German consumer price index (CPI) decreased 0.4 percent in January compared with an initial estimate of 5 percent decline, the Federal Statistics Office said on Friday.

The decline in CPI was largely led by a drop in the prices of clothing and footwear which decreased 4 percent and 2.4 percent respectively.

However, food prices went up by 0.3 percent in January as the prices of vegetable rose 3.4 percent.

Also, the harmonised index of consumer prices (HICP) for Germany, which is calculated for European purposes, dropped 0.5 percent in January month-on-month.

On annual basis, inflation rate in the eurozone’s largest economy rose 2 percent in January, mainly due to a 8.6 percent increase in energy prices.

“The inflation rate in January 2011 thus reached the threshold of two percent, which is important for monetary policy,” the report said.