German Inflation Weakens in July as ECB Studies Stimulus Options
Inflation in Europe’s largest economy was 1.1% in July, below economists’ estimates.
(Bloomberg) --
Germany’s inflation rate weakened more than expected, adding to evidence that the European Central Bank may have to step up support for the euro area.
Inflation in Europe’s largest economy was 1.1% in July, below economists’ estimates. While earlier reports from German states showed significant increases in the cost of package tours on the month, prices for clothing and fuel declined.
The figures come one day before a report on inflation in the 19-nation euro area, for which economists anticipate a reading of 1.1%. That’s well below the ECB’s aim, and policy makers have already tasked staff to study options for further monetary stimulus as the region’s outlook remains clouded by trade tensions and other uncertainties.
Most economists expect the ECB to follow up with an interest-rate cut in September, as well as resume asset purchases.
Germany has been at the core of the wider region’s year-long slowdown due to its focus on manufacturing and exports. A separate report on Tuesday showed economic confidence in the bloc slid further as executives in industry worried about production and orders, and managers in the services sector became more pessimistic about future demand.
--With assistance from Kristian Siedenburg, Harumi Ichikura and Catarina Saraiva.
To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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