Germany: Inflation is stable in August

German consumer prices rose 0.1% over the previous month in August, down from a 0.3% increase in July, according to data released by the Federal Statistics Office (Destatis) on 13 September. While higher oil prices and a significant increase in prices for clothing due to the arrival of the autumn and winter collections provided upward inflationary pressures, this was partially offset by lower prices for food and non-alcoholic beverages; furnishing and household equipment; and recreation and culture.

Inflation was stable at 2.0% in August after two monthly declines which followed May’s over one-year high. Meanwhile, annual average inflation edged up from 1.7% in July to 1.8%, the first increase in four months and the highest reading in over five years. Lastly, harmonized inflation (HICP) eased from 2.1% in July to 1.9% in August.

Germany Inflation Forecast

The Central Bank expects HICP inflation of 1.8% in 2018 and 1.7% in 2019. FocusEconomics panelists see CPI inflation averaging 1.8% in 2018, which is unchanged from last month’s forecast. For 2019, our panel sees average inflation remaining at 1.8%.