German Inflation Rate Confirmed at 0.4% in July


Consumer prices in Germany rose 0.4 percent year-on-year in July of 2016, following a 0.3 percent rise in June and matching preliminary estimates. It was the highest reading since January this year, as an increase in cost of food and services offset a decline in cost of energy.

Year-on-year, energy cost (total) decreased by 7.0 percent, following a 6.4 percent drop in June. Prices were down the most for: heating oil (-18.0 percent), motor fuels (-11.5 percent). Charges also fell for central and district heating (-8.9 percent) and gas (-2.9 percent). In contrast, cost of electricity rose 0.7 percent. 

Cost of food and non-alcoholic beverages rose 1.0 percent, after gaining 0.1 percent in the previous month. Prices went up for vegetables (+8.6 percent, including potatoes: +18.3 percent), fruits (+6.2 percent) and fish and fish products (+3.6 percent). In contrast, prices were down for dairy products (-6.8 percent).

Cost of goods as a whole fell by 0.7 percent, following a 0.8 percent drop in the preceding month. Cost of services rose 1.4 percent in July, the same pace as in a month earlier. Among goods, lower prices were recorded for coffee, tea  and cocoa (-3.9 percent, including unground coffee: -5.3 percent). In contrast, prices rose for newspapers and periodicals (+3.8 percent), tobacco products (+3.5 percent) and jewelry, clocks and watches (+5.8 percent). Among services, higher cost were seen for net rents exclusive of heating expenses (+1.1 percent), social facilities (+4.2 percent), insurance services (+3.0 percent) and transport services (+1.9 percent). In contrast, prices were down for  telecommunication services (-1.6 percent).

On a monthly basis, consumer prices rose 0.3 percent, following a 0.1 percent increase in June and in line with expectations. Prices were up especially for package holidays (+16.1 percent, including those to foreign destinations: +16.8 percent) and air tickets (+6.2 percent). Prices of food also increased by 0.3 percent. Higher prices were bserved for vegetables (+1.5 percent, including potatoes: +2.8 percent) and edible fats and oils (+4.7 percent). In contrast, energy prices fell 1.2 percent. Price decreases were recorded for both motor fuels (–1.9 percent) and household energy (–0.7 percent, including heating oil: –3.7 percent). Prices also dropped for clothing (–3.6 percent) and for footwear and accessories (–4.0 percent). 

The harmonized index of consumer prices (HICP) rose 0.4 percent from a year earlier after gaining 0.2 percent in June. On a month-on-month basis, the index also went up 0.4 percent, compared to a 0.1 percent rise in the preceding month.

German Inflation Rate Confirmed at 0.4% in July


Destatis l Rida Husna | rida@tradingeconomics.com
8/12/2016 11:00:46 AM