German Inflation Jumps to Highest in More Than a Decade
Germany’s inflation rate jumped to the highest level since 2008 as coronavirus restrictions were lifted and the economy reopened.
The July increase to 3.1% exceeded economists’ estimates for a 2.9% reading and will likely fuel the debate over whether the surge in inflation will ultimately fade.
Price are being boosted by several special factors, such as a reversal of last year’s sales-tax cut and changes to the basket of goods and services.
Germany’s Bundesbank has said that inflation in the country could climb as high as 4% this year, a level not seen since the euro was introduced more than two decades ago.
While many of the driving forces are temporary -- a point repeatedly made by the European Central Bank -- the data will raise questions whether policy makers need to start removing stimulus faster than anticipated.
What Bloomberg Economics Says...
“German inflation is heading for a sizzling second half of 2021 -- possibly reaching 5% once the statistical distortions from changes to HICP weights reverse in the winter.”
--Björn van Roye, senior economist. Click here for full REACT
The German reading comes after figures earlier Thursday from Spain also showed an acceleration. Data for France, Italy and the euro area are due Friday.
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