Inflation in Germany rose to its highest level in three months following the end of measures that had kept fuel prices in check, along with increasing oil prices amid renewed hostilities in the Middle East. Consumer prices climbed 2.8% year-on-year in July, the statistics office reported on Thursday.
This figure exceeds the 2.4% recorded in June and aligns with the average estimate from a Bloomberg survey. Earlier, Spain reported a stronger-than-expected acceleration of inflation to 3.8%.
Data on Inflation in the Eurozone
Inflation data for France, Italy, and the eurozone will be released on Friday. Economists anticipate that inflation in the eurozone, which consists of 21 countries, accelerated to 2.9%. These figures could play a crucial role in the upcoming decision by the European Central Bank (ECB) regarding interest rates.
Last week, the ECB opted to keep interest rates unchanged, taking additional time to evaluate the impact of the escalating attacks in Iran and surrounding areas. Meanwhile, September is viewed as the most likely timeframe for revisiting the possibility of a rate hike.
Positions of ECB Governing Council Members
Peter Kazimir, a member of the ECB Governing Council from Slovakia, stated that at least one more rate hike will be necessary, even if conditions improve. He cautioned that officials should avoid the emergence of “secondary inflationary effects.” His Lithuanian colleague, Gediminas Simkus, noted that the likelihood of a rate hike is “much higher” than that of rates remaining unchanged.
National data also revealed that energy price inflation in Germany accelerated to 8.3%, the highest level since April. Additionally, data released on Thursday showed that Germany’s economy grew more than expected in the second quarter, with figures for January-March revised upwards.
Source: Bloomberg
