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German inflation has risen again, adding to the urgency of pressuring the European Central Bank to raise interest rates after its first hike in more than a decade last week.
Consumption costs in the continent’s largest economy rose 8. 5 percent from a year earlier in July after falling to 8. 2 percent last month following relief measures by the transitional government. Analysts surveyed through Bloomberg expected a slowdown to 8. 1%.
A sharp rise in food and energy costs created the increase, rather than offsetting transient fuel tax refunds and subsidized transit tickets.
The eurozone’s record inflation was the ECB’s half-point rate hike this month, double what economists had expected. President Christine Lagarde said at the time that it was vital to deal with the symptoms that expectations of higher value were taking root. strong action in the future.
Beyond Germany, Italy and Spain are expected to set new inflation records on Friday. For the dominance of the euro as a whole, economists estimate that the value expansion accelerated to 8. 7% in July.
What Bloomberg Economics says. . .
“Patience with widespread price pressures makes the inflation outlook more worrying: with cuts in public transport prices and road fuel taxes ending in September, there is a threat that inflation will exceed 9%. “
Martín Ademmer, economist. For a complete reaction, click here
Thursday’s figures increase pressure on the German government as families are in even more of a hurry. While consumers will take advantage of ultra-economic public shipping through August, an imaginable Russian forced cut threatens more.
Finance Minister Christian Lindner, a member of the pro-business FDP party, has so far spoken out against new measures, even as his coalition partners question whether existing aid is enough.
The inflation figures revealed a significant difference between the harmonised national and European indicators which, according to ING, were likely due to “different remedies in seasonal changes and holiday packages in either measure”.
The Harmonized Index also gives more weight to food prices.
“Even the drop in the national measure is not the beginning of the end, but a government-induced relief of transience,” ING’s global macro lead executive Carsten Brzeski said in a report emailed to customers.
The Bundesbank said last week it expected inflation to remain at high levels in the coming months.
However, a separate european Commission investigation on Thursday suggested that German stocks could fall slightly. Sales value expectations across all sectors fell in July.
(Update with expectations survey in the last paragraph)
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