Germany's harmonized inflation rate climbed to 2.8% in July from 2.4% in June, the federal statistics office confirmed. Core prices eased slightly even as fuel costs jumped after a rebate expired, leaving the European Central Bank with a mixed picture heading into September.
Germany's statistics office confirmed on Wednesday that annual inflation accelerated to 2.8% in July, up from 2.4% in June on the harmonized measure used to compare prices across the European Union. The office confirmed preliminary data that had already been released.
Core prices tell a steadier story
Even as the headline rate climbed, core annual inflation eased to 2.4% in July from 2.5% in June, according to the final report. Food prices rose 2.5% year-on-year, while services inflation slowed to 2.9% from 3.1% in June. Core inflation remains well above the European Central Bank's 2% target regardless.
Fuel rebate expiry drives the headline higher
Destatis notes the expiry of a fuel rebate on June 30 was likely one additional reason behind the higher headline print. As a result, fuel prices rose 23.0% year-on-year in July, sharply higher than the 11.3% increase in June and the 18.0% increase in May. Energy costs therefore stayed underpinned even as other components cooled.
The report keeps the ECB attentive as policymakers return from the summer break and look toward September. With the US-Iran conflict still ongoing, the central bank may still need to act further to bring down price pressures by year-end.
Sources: Investing.com, InvestingLive
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