German Inflation Unexpectedly Steady as ECB Nears Exit Debate

  • Consumer prices rose annual 1.5% in July vs estimated 1.4%
  • ECB set to start discussion on QE tapering in autumn

German inflation unexpectedly remained stable in July, strengthening the case for a discussion about reducing European Central Bank stimulus in the autumn.

The rate was unchanged at 1.5 percent, the Federal Statistics Office in Wiesbaden said on Friday. Economists had predicted a drop to 1.4 percent, according to a Bloomberg survey. Consumer prices rose 0.4 percent from June.

Data from Europe’s largest economy bode well for inflation in the 19-nation region, which the ECB wants to see on a self-sustained upward path before it unwinds monetary stimulus. President Mario Draghi said this month that with asset purchases currently scheduled to run out at the end of the year, a discussion about the future path of policy will take place at one of the next Governing Council meetings.

Euro-area consumer prices increased an annual 1.3 percent in June and Draghi said the rate is likely to hover around that level in the coming months. Eurostat will report July data on Monday.

So far, the region’s booming economy has failed to translate into faster inflation and higher wages, but this may be about to change as activity continues to pick up and unemployment falls. After strong data from France, Spain and Austria on Friday, the currency bloc is in for another quarter of robust growth. That report is due on Tuesday.

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