BERLIN (Reuters) -
Germany staved off the threat of recession in the third quarter with unexpected growth but the economy remained in choppy waters as high inflation driven by a painful energy standoff with Russia surged, data showed.
Consumer prices, harmonized to compare with other European Union countries, were up 11.6% on the year in October, the federal statistics office said. Analysts polled by Reuters had forecast 10.9%, unchanged on the previous month.
The Ifo economic institute warned that the full effect of inflation had not yet reached consumers, even as its survey showed a slightly lower number of companies in Germany planning price hikes in October.
Economists said inflation was likely to stay in double-digit territory for some time, keeping pressure on the European Central Bank to continue raising interest rates after it hiked them to their highest level since 2009 on Thursday.
“It is not yet clear that inflation has peaked, even if the recent decline in market prices for natural gas has raised hopes for this,” said Thomas Theobald of the IMK institute.
A plunge in energy imports from Russia has sent energy prices spiralling in Germany, pushing inflation to its highest rate in over 25 years while fuelling concerns of a potential gas shortage this winter, even with storage facilities filled to near capacity.
Despite the headwinds, gross domestic product posted unexpected growth of 0.3% in the third quarter compared to the second, the statistics office said separately.
The reading took economists by surprise. After myriad warnings of a looming recession for Europe’s largest economy, they had forecast a contraction of 0.2%, according to a Reuters poll of analysts.