Germany’s inflation rate increased less than initially expected last month, indicating price pressures remain subdued even as the economy began to recover from its steepest recession in more than 60 years.
Consumer prices, calculated using a harmonized European Union method, fell 0.1 per cent from a year earlier after dropping 0.7 per cent in July, the Federal Statistics Office in Wiesbaden said in a statement today.
That compares with an initial estimate that prices were unchanged on the year. From the previous month, prices increased 0.3 per cent. Inflation may accelerate as the global economy recovers, pushing up demand for commodities such as oil.
While the German economy unexpectedly returned to growth in the second quarter, the pace of consumer-price increases may be restrained as rising unemployment restricts demand.
The smaller annual price decline is “mostly an effect of last year’s high oil prices falling out of the index,” Anders Matzen, an economist at Nordea Bank in Copenhagen, said before the data was published.
“Going forward, the very sharp decline in economic activity and the spare industrial capacities mean underlying inflation in Germany and the euro area will continue to decline.”
Crude-oil prices have more than doubled since mid-February to around $70 a barrel.
That’s still more than 50 per cent below their July 2008 record. On a non-harmonized basis, consumer prices were unchanged in August from a year earlier and increased 0.2 per cent from the previous month, today’s report showed.
“When we look at basic goods we won’t have inflation pressure for the next one and a half years since sellers don’t have much space to raise prices,” said Jens-Oliver Niklasch, an economist at Landesbank Baden-Wuerttemberg in Stuttgart.
Euro-area consumer prices fell 0.2 per cent in August from a year earlier, less than economists had forecast, data published on August 31st showed.
Bloomberg