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German inflation edges up to 2.3% in July

July 30, 2024

New data from Germany's federal statistics agency showed that inflation in July has increased compared to the previous year. The news came as a surprise after economists had predicted consumer prices to stabilize.

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A supermarket in Germany
Inflation in Germany continued to rise in JulyImage: Frank Hoermann/SVEN SIMON/IMAGO

Inflation in Germany rose unexpectedly in July, according to preliminary figures released on Tuesday.

New data released federal statistics agency Destatis on Tuesday showed that consumer prices were up 2.3% from a year ago.

The figures also represented a month-on-month upward trend compared to the 2.2% annual rise seen in June.

ECB eyes German inflation

Economists had previously expected inflation to stabilize. A survey conducted by the ifo Institute showed that German companies had less planned price increases in consumer sectors.

July's figures could impact the European Central Bank's (ECB) decision on whether or not to cut interest rates in September.

"The just-released flash estimate of German inflation in July shows that there is still some way to go before it is back to the European Central Bank’s target of 2%," said ING analyst Carsten Brzeski.

"For the ECB, today’s data releases have not made things any easier. In fact, in terms of growth, the divergence has widened, with Germany falling behind while countries like France and Spain are enjoying a decent recovery," he added.

Preliminary economic data released earlier on Tuesday showed that Germany's economy unexpectedly shrank in the second quarter, with economic headwinds including a shortage of skilled labor, high energy prices, and an automotive industry that is racing to adapt to electric mobility.

zc/wmr (dpa, AFP)