German Inflation Unexpectedly Rose in July
European Central Bank President Jean-Claude Trichet
Hannelore Foerster/Bloomberg
European Central Bank President Jean-Claude Trichet said on July 7 that euro-region inflation will stay “clearly above” the central bank’s 2 percent limit in coming months and signaled concern that price pressures may fuel wage demands.
European Central Bank President Jean-Claude Trichet said on July 7 that euro-region inflation will stay “clearly above” the central bank’s 2 percent limit in coming months and signaled concern that price pressures may fuel wage demands. Photographer: Hannelore Foerster/Bloomberg
Inflation in Germany, Europe’s largest economy, unexpectedly accelerated in July as energy costs increased.
The inflation rate, calculated using a harmonized European Union method, rose to 2.6 percent from 2.4 percent in June, the Federal Statistics Office in Wiesbaden said today in an initial estimate. Economists predicted the rate would hold steady, according to the median of 18 estimates in a Bloomberg News survey. Prices climbed 0.5 percent from the previous month.
European Central Bank President Jean-Claude Trichet said on July 7 that euro-region inflation will stay “clearly above” the central bank’s 2 percent limit in coming months and signaled concern that price pressures may fuel wage demands. In Germany, rising energy costs are among the reasons why consumer confidence will decline next month, market-research company GfK said yesterday.
“We haven’t yet seen the high point of price developments in Germany -- inflation will creep toward 3 percent in the coming months,” said Alexander Koch, an economist at UniCredit Group in Munich. “The ECB will stay on course and probably raise interest rates another time in October.”
The ECB this month raised borrowing costs for a second time in 2011, bringing its benchmark to 1.5 percent. The Frankfurt- based central bank forecasts euro-area inflation will average 2.6 percent this year and 1.7 percent in 2012.
On a non-harmonized basis, German inflation accelerated to 2.4 percent from 2.3 percent and consumer prices rose 0.4 percent in the month, the statistics office said.
In the euro region, inflation probably held at 2.7 percent in July, a Bloomberg survey shows. Eurostat, the European Union’s statistics office in Luxembourg, is scheduled to release that data on July 29.
Bundesbank President Jens Weidmann said earlier this month that interest rates in the euro area are “still relatively low,” indicating he sees further room to tighten monetary policy.
To contact the reporters on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net; Jeff Black in Frankfurt at 205 or jblack25@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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