-Christian Schulz, senior economist at Berenberg Bank
Europe's powerhouse continues to disappoint… Still, it is not a question that the German economy is the star of the Eurozone, with its low unemployment, robust growth and relatively low debt level. Nonetheless, the latest data raised concerns about the resilience of the German economy, and while officials claim the worse is over, further weakness can be transferred to other countries and lead to a second wave of crisis.
Friday's report confirmed that the rate of inflation in Europe's largest economy fell to its lowest level in more than three years last month. The costs of living in Germany advanced 1.0% on a 12-month basis, turning lower from 1.2% in February. The last time inflation moved even lower was in June 2010. When using the Harmonised CPI index, which is the ECB's inflation yardstick, the inflation stood even lower– at 0.9%. On a monthly basis, inflation increased only 0.3% following February's 0.5%. Earlier last month, analysts claimed the CPI will stand at 0.4%, meaning the reality was even more disappointing.
German inflation has an especially noticeable market impact, as the economy represents a majority of the overall Eurozone output. While Draghi claimed policymakers are considering the implementation of fresh measures, not everybody is that convinced they will act in the coming months.
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