Brandenburg Gate in Berlin, Germany

Germany Inflation August 2023

Germany: Harmonized inflation drops to lowest level since May in August

Harmonized inflation came in at 6.4% in August, down from July’s 6.5%. August’s result marked the weakest inflation rate since May. However, it exceeded market expectations of 6.3%, and inflation excluding energy and food—goods whose prices tend to be volatile—was stable at 5.5%, suggesting that high inflation remains deep-seated in the economy.

In addition, the trend pointed down slightly, with annual average harmonized inflation coming in at 8.5% in August (July: 8.7%). Meanwhile, consumer price inflation edged down to 6.1% in August, from July’s 6.2%.

Finally, harmonized consumer prices rose 0.39% in August over the previous month, which was below July’s 0.48% increase. August’s result marked the weakest reading since May.

Inflation is set to continue declining through to the end of this year due to weak domestic demand and a high base effect resulting from last year’s surge in energy prices. In addition, the low base effect created by a nine-euro train ticket from June to August 2022 will cease from September onward, further dampening price pressures. However, sticky core inflation is an upside risk.

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