Germany Inflation July 2019


Germany: Harmonized inflation moderates noticeably in July

August 13, 2019

German harmonized consumer prices rose 0.4% month-on-month in July, up from the 0.3% rise recorded in June. July’s uptick came on the back of higher prices for food and non-alcoholic beverages, pricier alcoholic beverages and tobacco while housing-related utilities also became more expensive. On the other hand, significantly cheaper clothing and footwear limited the overall price gain.

Harmonized inflation, meanwhile, dropped to 1.1% in July from 1.5% in the prior month, while average harmonized inflation edged down from 1.9% in June to 1.8% in July. Lastly, consumer price inflation rose from 1.6% in June to 1.7% in July and annual average consumer price inflation was stable at June’s 1.7% in July.

Regarding the inflation outlook, Carsten Brzeski, chief economist at ING Germany, noted that “with negative base effects from oil prices and the cooling economic outlook, German headline inflation will, in our view, continue to fluctuate between 1% and 1.5% in the coming months, adding to the argument for new ECB action in September.”

FocusEconomics Consensus Forecast panelists expect harmonized inflation to average 1.5% in 2019, which is unchanged from last month’s forecast. For 2020, our panel sees average inflation at 1.6%. This is largely in line with the Bundesbank projections of June 2019. While the Bundesbank kept its forecast for harmonized inflation in 2019 unchanged at 1.4%, it revised down its inflation expectation for next year to 1.5% from 1.8% in December 2018.

Author:, Economist

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Germany Inflation Chart

Germany Inflation July 2019

Note: Month-on-month and year-on-year changes of harmonized index of consumer prices %.
Source: Federal Statistics Office (Destatis) and FocusEconomics calculations.

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