Annual inflation in Germany fell to 6.1 percent in August

Annual inflation in Germany fell to 6.1 percent in August, below expectations.

The German Federal Statistical Office (Destatis) announced the main data for August on price increases.

Consequently, annual inflation in Germany, which was 6.2 percent in July, fell to 6.1 percent in August. Market expectations were that inflation would fall to 6 percent in August.

The inflation rate in the country increased by 0.3 percent per month.

The EU-based CPI also rose 0.4 percent in August from the previous month and 6.4 percent on an annual basis.

ENERGY AND FOOD PRICES HAVE BEEN DEFINITIVE

In Germany, energy and food stood out as the main price drivers for months, while food prices continued to be the main driver of inflation in August. Food prices rose 9 percent and energy products 8.3 percent in August compared with a year ago.

Meanwhile, as separate data, import prices in Germany fell 13.2 percent in July compared to the same period a year earlier, the biggest drop since 1987.

Analysts predict that falling import costs will also affect consumer prices.

Since the German economy purchases many primary products and raw materials from abroad, the fall in import prices affects consumer prices with a lag.

While the ECB has raised its main interest rates nine times in a few months, the ECB’s board of analysts will meet on September 14 to set interest rates.

Although the ECB is targeting 2.0 percent inflation, the bank’s management has repeatedly stressed that it will decide on further rate hikes if the data situation warrants it.

On the other hand, while the German economy contracted 0.4 percent in the last quarter of last year and 0.1 percent in the first quarter of the year, it failed to grow in the second quarter of the year.

While many crises such as the Covid-19 outbreak, supply chain disruptions and the Russia-Ukraine war in recent years have brought weaknesses in the German economy to the surface, the fact that many countries, especially China can produce more and more of imported goods from Germany and interest rates rise with high inflation, making it difficult for the German economy to grow.

Slowing global growth, falling industrial production and consumer efforts to cope with rising inflation are also negatively affecting the German economy. (AA)