German August CPI Rises 2.9% Annually, Below Forecasts

• The annual CPI reading in July was 2.8%.
• The HICP came in at 2.9% year-on-year, below the 3.1% consensus.
• The prior HICP value was also 2.8%.
• Core CPI held steady at 2.4% year-on-year, unchanged from the prior month.
• The full report is available from Destatis.

Consumer price inflation in Germany reached 2.9% on an annual basis in August, according to the preliminary estimate. On a monthly comparison, prices edged up 0.2% from July. The Harmonised Index of Consumer Prices (HICP), which the ECB uses for policy, also recorded a 2.9% annual increase and a 0.2% monthly rise, in line with the national reading.

The acceleration was largely driven by energy costs. Energy prices surged 10.5% compared with a year earlier, a sharp pickup from the 8.3% gain in July and the 3.4% rise in June.

Core inflation, stripping out volatile food and energy items, was estimated at 2.4% year-on-year in August. Financial markets showed little reaction to the data, as interest rate expectations remained unchanged. The ECB is still widely anticipated to raise rates in September, though sentiment for further tightening has softened.