Frankfurt, April 26 (Bloomberg) -- German consumers paid more for the goods andservices they bought in April than in March, as food and energy prices rose. Consumer prices rose 0.3 percent in the month to mid-April and 2.8 percent in the year,the Federal Statistics Office said. Analysts had expected prices to rise 0.2 percent inthe month. Calculated according to European Union standards, the annual inflation raterose to 2.9 percent. ``Inflation shows there are still risks,'' European Central Bank council member VitorConstancio told reporters on his way to the bank's rate-setting meeting today whenasked whether the latest European consumer price figures confirm the bank's wait-and-see stance. The ECB -- which kept rates unchanged at today's meeting -- remains the only majorcentral bank not to have lowered borrowing costs this year. It maintains that the slowingU.S. economy and Japan's economic weakness will have only a limited impact ongrowth in the 12 nations sharing the euro. The ECB aims to keep inflation below 2 percent. Higher inflation in Germany and Italy,the euro zone's No. 1 and No. 3 economies, indicates euro-area inflation may rise abovethe 2.6 percent in March. April consumer prices in 12 Italian cities rose 0.4 percent fromMarch and 3.1 percent in the year. ``There has been no 'all clear' so far for monetary policy from price developments,''Bundesbank council member Franz- Christoph Zeitler said in a statement Tuesday.Zeitler advises ECB council member and Bundesbank President Ernst Welteke onmonetary policy. He doesn't set interest rates.
Primary Objective
Business confidence in Europe's largest economy is at its lowest in 20 months, a reportby the Ifo institute showed Monday. Confidence among executives in France and Italy isalso on the wane. Still, the ECB has said it's sticking to its primary objective of ensuringprice stability. Inflation risks ``have lessened but not disappeared'' and are the ``overwhelming reasonwhy we decided not to change interest rates,'' ECB President Wim Duisenberg said at ameeting of European Union finance ministers and central bank governors in Malmoe,Sweden, over the weekend. German producer prices, an indicator of future consumer price inflation, rose more thanexpected in March and grew at the highest annual rate since July 1982, driven by higherprices for natural gas and pork, a report showed today. Earlier this week in France, a government estimate showed consumer prices rose inMarch at the fastest pace in six months, as food scares lifted the cost of fresh produce.
Food and Energy
Rising food and energy prices were mostly responsible for higher inflation. In NorthRhine-Westphalia, the largest of the six states to report preliminary consumer prices thisweek, the price for pork rose 4.8 percent in the month and heating oil cost 0.4 percentmore. German inflation figures ``reflect the influence of the BSE and foot-and mouth diseases,''the ECB's Chief Economist Otmar Issing said on Wednesday. The diseases will delay afall of euro- area inflation this year, Issing also said, though they are ``temporaryeffects.'' Germany's inflation index accounts for about 31 percent of the euro area's index. Higherfood prices may add between 0.2 and 0.4 percent to the euro area's annual inflation ratethis year, Deutsche Bank Research estimates. Still, as soon as the effect of the diseases fades and oil prices remain below their near-decade highs reached last year, analysts say inflation should begin to fall. Excluding food prices, ``the domestic price picture is fairly good,'' said ManuelaPreuschl, an economist at Deutsche Bank Research in Frankfurt.