German inflation edges up to 2.4% in July

Inflation in Germany, the biggest European economy, edged up in July provisional data from the national statistics office showed on Wednesday, slightly exceeding analyst forecasts. Inflation stood at 2.4 percent, the Destatis office said, matching a previous high for 2011 set in April. In June, German inflation had stood at 2.3 percent, and a survey by Dow Jones Newswires determined that analysts had pencilled in the same figure for July. On a monthly basis, consumer prices rose by 0.4 percent, the Destatis office said, a steeper increase than the 0.1 percent level recorded in June. Analysts had expected a slightly smaller gain of 0.3 percent in July. "As in the previous months, the inflation rate is mainly influenced by price increases for energy products (household energy and motor fuels)," a Destatis statement said. Commerzbank economist Ulrike Rondorf felt "there is a risk that this trend will continue: cost pressure among companies remains high and demand is likely to increase further in view of the positive labour market situation." But Berenberg Bank senior economist Christian Schulz noted: "The data does not point to demand pressures on the back of better employment and income expectations driving up prices yet." The European Central Bank has an inflation target of below but close to 2.0 percent for the eurozone, and raised its key interest rate to 1.50 percent this month as inflation for the 17-nation bloc hit 2.7 percent. Capital Economics economist Jennifer McKeown noted that core German inflation was holding steady well below 2.0 percent and also underscored slower growth of the ECB's M3 indicator of eurozone money supply. "In all, the latest data seem to confirm the absence of underlying inflationary pressures in the eurozone, supporting our view that July’s ECB interest rate hike might prove to be the last in the cycle," she said.