Inflation in Germany, Europe’s largest economy, remained stable in January that the price of clothing declined and unemployment increases dampened demand.Consumer prices calculated on a consistent basis of the European Union rose 0.8 percent over one year after having kept pace in December, the Federal Statistics Office in Wiesbaden said today. This compares with an estimate of 0.7 percent published January 27. Compared to the previous month, prices fell 0.6 percent, also less than initially expected.Inflation “Outlook remains moderate, mainly because of excess capacity still important in manufacturing,” Alexander Koch, economist at UniCredit Group in Munich, said before the data were published. “Domestic demand shows People are still concerned about unemployment and it seems that we remain in a consumer recession. “While crude oil posted the largest annual gain in a decade in 2009 and commodities such as copper and sugar have soared, lower demand in Germany is keeping price pressures under control. Industrial production fell unexpectedly in December, and the Bundesbank said last month it has now approach “prudent” for the economic outlook.Fuel oil prices rose 7.2 percent in January compared to the previous month and rose by 7 per cent in the year, the statistics office said. Clothing prices fell 4.5 percent in the month and rose 0.3 percent in the year. Food prices rose 1.2 percent in the month and fell 1.4 percent in the year.The forecasts of the ECBBased on a national measure of consumer prices in Germany fell 0.6 percent in January from December and rose 0.8 percent over the previous year.Inflation in the 16-country euro region accelerated to 1 percent in January, the fastest in 11 months, the European Union statistics office in Luxembourg said in an estimate of January 29The European Central Bank, which aims to keep annual price gains in consumption slightly below 2 per cent by December May forecast that average inflation of around 1.3 per cent in 2010 and nearly 1.4 cent in 2011. It will publish new forecasts in March.“I have absolutely no problem with the current level of expectation of inflation as an average for next year, ECB President Jean-Claude Trichet said February 4. Inflation expectations are “well anchored”.Recent data have painted a mixed picture of the German economy. While industrial production fell in December, manufacturing output rose for the fifth month of January, according to a separate report.The confidence of European investors fell for the first time in seven months in February as the economic recovery has shown signs of abating, the Sentix research institute said yesterday.Metro AG, the largest retailer in Germany, expects that 2010 will be “another difficult year” for the economy, Chief Executive Officer Eckhard Cordes said January 29.The German economy will grow at a “moderate” this year, Bundesbank President Axel Weber said last week. “The recovery is expected to accelerate during 2011.”