UPDATE 2-German inflation exceeds ECB target on "Easter bunny" bounce

German annual inflation accelerated to 2.1 per cent in April, exceeding the European Central Bank's target for the first time since November, data showed on Tuesday, suggesting little need for further monetary easing. Consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 2.1 per cent year-on-year after an increase of 1.4 per cent in the previous month, preliminary data from the Federal Statistics Office showed.

That compared with the consensus forecast for a 1.7 per cent rise and was above the ECB's target of close to but just below 2 per cent for the eurozone as a whole. Eurozone stocks and German bond yields rose after the data. ING economist Carsten Brzeski said on Twitter: "Is #hyperinflation back? 2.1 per cent in April! No, the Easter bunny is to blame."

He pointed to the cost of package holidays going up, with Easter falling later this year than last, and higher fuel prices. "We will see a drop back clearly below 2 per cent in May and then a lot obviously will depend on energy prices," he told Reuters.

With growth slowing and inflation expected to decline later in the year, the ECB already announced more support measures, such as a new round of ultra-cheap bank loans, hoping this would boost growth by maintaining the flow of credit to the real economy. But the German inflation rise and a stronger-than-expected eurozone growth figure suggest there is no reason for the ECB to offer more support, such as a tiered deposit rate, which would shield some banks from the side effects of negative rates, Brzeski said.

"There clearly is no case for further easing," he said. ECB board member Benoit Coeure said last week that he saw no reason to create a tiered deposit rate that exempts banks form part of an ECB charge on their idle cash.

Inflation in the euro zone has long been below the ECB's target and ECB rate-setter Olli Rehn said on Friday that investors may be doubting the effectiveness of the ECB's monetary policy measures in boosting inflation. Despite the ECB pursuing an accommodative monetary policy, inflation is not expected to hit the central bank's target for years to come.

A breakdown of non-harmonised national data showed the price of energy rose by 4.6 per cent in April while the cost of services and goods also increased. Economists expect annual euro zone inflation - due to be published on May 3 - to accelerate to 1.6 per cent in April from 1.4 per cent in March. (Editing by Madeline Chambers and Alison Williams)