UPDATE 1-Inflation up in three German states in April, pointing to national increase

Inflation rose in three key German states in April, preliminary data showed on Wednesday, suggesting Germany's national ‌inflation rate could increase this month amid higher energy prices due to the Iran war. In Bavaria, the inflation rate rose to 2.9% in April from 2.8% in the previous ‌month. In Lower Saxony, it accelerated to 3.0% from 2.6%, and in Baden-Wuerttemberg ‌to 2.6% from 2.5%.

In North Rhine-Westphalia, the consumer price index stood unchanged at 2.7%. The war in Iran has pushed energy and raw material prices, straining household budgets and raising costs across German industries. ⁠The ​German government now expects ⁠inflation to accelerate to 2.7% this year and 2.8% in 2027.

Economists polled by Reuters are forecasting ⁠a harmonised national inflation rate in Germany - the euro zone's largest economy - of 3.1% in April, ​up from 2.8% in the previous month. National figures will be released later ⁠on Wednesday.

The German data comes ahead of the euro zone inflation release on Thursday. Inflation in the ⁠bloc ​is expected at 2.9% in April, up from 2.6% in the previous month, according to economists polled by Reuters. The European Central Bank is expected to ⁠keep interest rates on hold at a meeting on Thursday, but hikes are likely to ⁠be on the table ⁠at the next meeting in June as policymakers worry that an initial energy-induced price shock could linger and push up inflation ‌over the ‌longer term.

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