Germany: Inflation rises in July
July 27, 2011
In July, consumer prices added 0.4% over the previous month, according to preliminary estimates released on 27 July by the National Statistics Institute (Destatis). The monthly rise was above the 0.1% increase observed in June and overshot private sector analysts' expectations that had anticipated consumer prices rising a more moderate 0.3%. The main drivers behind the monthly jump were seasonal factors related to the summer holidays. As a result of the monthly rise, inflation rose from 2.3% in June to 2.4% in July, back to the level observed in April and that had marked the highest rate of inflation in more than two years. According to Destatis, the rise was mainly the result of elevated prices for energy, especially for motor fuels. At the current level, inflation continues to linger above the European Central Bank's objective of keeping inflation rates ?below but close to 2%?. Meanwhile, HICP inflation (based on the harmonized index of consumer prices) jumped from 2.4% in June to 2.6% in July. Complete and more detailed inflation data will be published on 10 August. The Bundesbank projects inflation to average 2.5% this year, before moderating to 1.8% in 2012.
Author: Ricardo Aceves, Senior Economist