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German inflation rate could reach two percent in January: Bundesbank

FRANKFURT (Reuters) - German inflation could hit 2 percent in January due to higher energy prices, the Bundesbank said on Monday, hitting the European Central Bank's elusive target for the first time in four years.

Germany's relatively quick inflation pick up has increased calls on the ECB to scale back its extensive stimulus measures as real savings rates turn negative and fears mount that the bank would now overshoot its target of close to but below 2 percent.

The ECB has pushed back, however, arguing that it looks at inflation across the euro zone, not just one member, and it needs to see a broad based, sustained rise in prices before lowering its guard.

"Due to a considerable increase in the daily average prices of oil products, the (inflation) rate could well reach 2 percent in January," the Bundesbank said in its monthly report.

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Inflation was 1.1 percent across the 19-member euro zone in December and 1.7 percent in Germany, the bloc's biggest economy and also home to the ECB. But elsewhere, like Ireland, Cyprus, Greece and Italy, price growth is either negative or just above zero.

The ECB has agreed to scale back its monthly bond purchases by a quarter from April but also extended the program until the end of 2017.

An ECB survey last week also showed that underlying inflation, a key indicator watched by rate setters, will remain weak for the years to come, suggesting that the ECB is still far away from reducing its unprecedented stimulus measures.

(Reporting by Andreas Framke; Editing by Balazs Koranyi)