German Inflation Eases to 2.8% in October, Below Forecasts, on Fuel Tax Cut

German inflation slowed more than expected in October to 2.8% year-on-year, preliminary data from the federal statistics office showed Friday, as a government fuel tax cut lowered prices at the pump. Analysts polled by Reuters had forecast the EU-harmonised consumer price index at 3.1% for October, down from 3.3% in September. Energy price growth slowed to 12.2% from 14.9% the prior month, while core inflation, excluding volatile food and energy prices, fell to 2.1% from 2.4%. The fuel tax reduction, introduced at the start of October and set to remain in place until year-end, produced a modest decline in fuel prices. The data precedes a euro zone inflation update due on Wednesday, with economists expecting 3.9% for October versus 3.8% in September. The European Central Bank left rates unchanged Thursday but signaled another hike in December, warning that high and rising energy costs are fueling inflation risks.