Germany: Inflation moderates in August as oil prices retreat
August 29, 2011
In August, consumer prices dropped 0.1% over the previous month, according to preliminary calculations released on 29 August by the National Statistics Institute (Destatis). The monthly reading contrasted the 0.4% increase tallied in July but was in line with market expectations. The August outturn marked the first fall in consumer prices since January. Owing to the monthly drop, inflation edged down from 2.4% in July to 2.3% in August. However, at the current level, inflation continues to linger above the European Central Bank's inflation target of ?below but close to 2%?. HICP inflation fell from 2.6% in July to 2.4% in August. According to Destatis, the decline in inflation was mainly the result of a fall in energy prices, particularly in motor fuels. A complete and more detailed inflation data set will be published on 9 September. The Bundesbank projects inflation to average 2.5% this year, before moderating to 1.8% in 2012.
Author: Ricardo Aceves, Senior Economist