Germany: Harmonized inflation accelerates in August
September 1, 2022
Harmonized consumer prices rose 0.42% from the previous month in August, down from the 0.76% drop recorded in July.
Harmonized inflation rose to a record-high 8.8% in August (July: 8.5%) according to preliminary data. The uptick was driven by a marked increase in goods prices. In particular, energy and food prices continued to rise sharply in the month. Consequently, annual average harmonized inflation rose from 6.3% in July to 6.8% in August.
Carsten Brzeski, global head of macro at ING, commented:
“The status quo is that headline inflation will increase further. […] The sharp rise in wholesale gas prices will be passed through to customers over the next few months and the announced gas levy will increase prices and push inflation higher. This is why we expect German inflation to get close to 10% by year-end. However, with faltering demand as consumers will increasingly be unable and unwilling to pay high prices, as well as negative energy base effects, headline inflation should start to come down over the course of 2023 and could even touch 2% by the end of 2023; as outrageous as such a call currently looks.”