German inflation eases further in April

German annual inflation slowed further in April to well below the European Central Bank's target, data showed on Wednesday, giving the ECB additional leeway to deploy stimulus policy to counter the economic impact of the coronavirus pandemic.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 0.8% year-on-year after a 1.3% increase in the previous month, the Federal Statistics Office said. The reading was the lowest since November 2016 and came in above a Reuters forecast for 0.5%.

On the month, EU-harmonised prices rose by 0.4% in April. That compared with a Reuters forecast for 0.1%. While prices for fresh food jumped, the recent oil price slump put a noticeable damper on the inflation rate for household energy, Commerzbank analyst Marco Wagner said.

"Due to the corona crisis, however, many other prices cannot be surveyed as usual, which limits the informative value for the underlying inflation in particular," Wagner added. The European Central Bank targets inflation of close to but below 2% for the single currency bloc.

The European Central Bank has ditched a cap on how many bonds it can buy from any single euro zone country, clearing the way for potentially unlimited money-printing as it scales up its response to the pandemic.