German Inflation Rises To 2.9%

(RTTNews) - Germany's inflation accelerated to a four-month high in August on energy prices, flash data from Destatis showed on Monday.

Consumer prices rose 2.9 percent year-on-year in August after a 2.8 percent gain in July. A similar higher rate was last seen in April. Prices were expected to climb 3.0 percent.

EU harmonized inflation also rose to a four-month high of 2.9 percent from 2.8 percent in the previous month. However, this was weaker than forecast of 3.1 percent.

ING economist Carsten Brzeski said the path of headline inflation remains highly affected by the war in the Middle East and oil prices. The economist expects oil prices to push up headline inflation to above 3 percent and keep it there at least until year-end.

The stage looks increasingly set for another rate hike at next week's European Central Bank meeting, he said.

With oil prices remaining elevated and the risk of a fresh gas price shock increasing, most ECB policymakers are likely to see the case for another rate hike, he added.

The ECB had raised its key interest rates for the first time in nearly three years in June. Following a quarter point-hike, the bank had kept rates unchanged at its July meeting.

Data today showed that energy price inflation rose to 10.5 percent from 8.3 percent. Meanwhile, food inflation eased to 0.1 percent from 0.4 percent.

Core inflation that excludes prices of food and energy held steady at 2.4 percent in August.

Services inflation softened to 2.8 percent from 2.9 percent, while prices of goods climbed at a faster pace of 3.0 percent after rising 2.5 percent in July.

On a monthly basis, consumer prices moved up 0.2 percent but slower than the 0.8 percent rise posted in July. Likewise, the harmonized index of consumer prices climbed 0.2 percent, following prior month's 0.9 percent increase.

Both CPI and HICP were expected to rise 0.3 percent each. Final results for August will be released on September 10.