Anticipated Sizeable Decrease in German Inflation Rate in August
After seeing an increase in July, Germany's inflation rate is believed to have significantly decreased in August, based on data released on Thursday from various federal states. In regions like Baden-Württemberg, Bavaria, Brandenburg, Hesse, North Rhine-Westphalia, and Saxony, inflation rates dropped significantly. In particular, Baden-Württemberg and Hesse saw rates of 1.5% and 1.7% respectively.
The Federal Statistical Office will offer a preliminary estimation for Germany as a whole at 14:00. Economists polled by Reuters predict that the inflation rate will decrease to 2.1%. This would be the lowest level in approximately three and a half years. In July, it had climbed to 2.3% from 2.2% in June.
"The inflation data from the federal states suggests that German inflation has dropped more than what was initially anticipated," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "Unfortunately, it seems to be on the rise again." In the next six to twelve months, the rate is likely to return to around 3%.
"Fuel, diesel, and heating oil were less expensive in August," stressed economists at Landesbank Hessen-Thüringen. According to ADAC, the petrol price even hit its lowest point of the year at certain times. However, most experts are not quite ready to declare victory over inflation. "High wage agreements are still pushing up service prices," said Helaba. Many companies are attempting to pass their increased labor costs on to their customers.
The decreased inflation rates in several federal states, including Baden-Württemberg and Hesse, could potentially lower the nationwide inflation rate predicted by economists. Despite the significant drop in August, there are concerns that the inflation rate might start to rise again in the future.
