Harmonized consumer prices rose 0.08% from the previous month in July, contrasting the 0.17% drop recorded in June.
Harmonized inflation came in at 8.5% in July, above June’s 8.2%. Energy prices rose sharply over the same period a year ago despite the government’s relief package that came onto force on 1 June. Meanwhile, the trend pointed up, with annual average harmonized inflation coming in at 6.3% in July (June: 5.8%).
Commenting on the inflation outlook, Carsten Brzeski, global head of macro at ING, added:
“The energy relief package will end in August. This will also be the moment when the temporary relief to headline inflation ends. Even if pricing power in both industry and services seems to have peaked, we still expect the pass-through from higher costs to last at least over the summer months, if not longer. The risk of an end to Russian gas for Germany has already increased gas prices again in recent weeks and is likely to keep energy prices at highly elevated levels going into the winter season. This makes any significant retreat of headline inflation highly unlikely for 2022. It will take until 2023 before negative base effects send the headline rate towards 2% again.”
FocusEconomics panelist expect harmonized inflation to average 7.4% in 2022 and 3.7% in 2023.