by Maria Martinez
BERLIN (Reuters) – German inflation calculated by European standards slowed slightly in August but turned out to be higher than expected, preliminary data from the Federal Statistics Office showed on Wednesday.
The harmonized consumer price index (HICP), which allows comparison between eurozone countries, rose 6.4% year on year in August in Germany after rising 6.5% in July.
Economists polled by Reuters had forecast HICP inflation of 6.3%.
Inflation calculated by German standards slowed to 6.1% in August, from 6.2% the previous month.
Core inflation in Germany, which excludes volatile items such as food and energy, stood at 5.5% in August, unchanged from July.
Preliminary data published Wednesday morning on the evolution of consumer prices in August of six Länder foreshadowed an acceleration of inflation in Germany.
Inflation figures from Germany, the euro zone’s biggest economy, come as the European Central Bank (ECB) is still waiting for tangible signs that core inflation is slowing for good.
Central bank officials will therefore closely monitor eurozone inflation data, which will be released on Thursday, following the German figures and higher-than-expected data from Spain.
Economists polled by Reuters expect the inflation rate in the euro zone to fall to 5.1% in August from 5.3% in July.
The figures released on Wednesday mean that the rates of inflation and underlying inflation will probably be a little higher than expected in the euro zone, said Andrew Kenningham, economist at Capital Economics for Europe.
“As this is the latest inflation data ahead of the ECB’s September meeting, it could be enough to tip the scales in favor of another 25 basis point rate hike, although the decision s ‘tight announcement,’ he says.
The next ECB monetary policy meeting will take place on September 14.
Inflation remains well above the central bank’s 2% target and could remain so at least until 2025, but weak economic data is intensifying debate over how much further action the ECB needs to take.
“As long as the ECB sticks to its current position of emphasizing actual data rather than expected data, a rate hike at the September meeting is likely,” Carsten Brzeski said. Head of Macroeconomics at ING.
(Written by Rachel More, French version Kate Entringer and Corentin Chapron, edited by Blandine Hénault)
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