German Inflation Slows in July
Inflation in Germany eased back slightly in July, preliminary data showed Monday, but still surpassed the level targeted by the European Central Bank.
Prices added 2.0 percent year-on-year, federal statistics authority Destatis said, compared with 2.1 percent in June.
The figure, based on data from several German states, marks the second consecutive month that price growth has slowed and disappointed analysts who had predicted a jump in inflation.
But it remains above the ECB's goal of aiming for an inflation rate of "below, but close to" 2.0 percent.
Using the Harmonized Index of Consumer Prices (HICP) yardstick preferred by the ECB, inflation stood unchanged at 2.1 percent, in welcome news for the bank as it readies to wean the eurozone economy off its crisis-era stimulus measures.
Policymakers at the Frankfurt institution are keeping a close eye on price growth data from across the 19-nation euro area after they announced last month that they would wind down their mass bond-buying program this year.
Encouraged by healthy economic growth and seeing inflation headed in the right direction, the ECB decided to halve its monthly bond purchases to 15 billion euros ($17.5 billion) from October, before ending the scheme in December.
But although eurozone-wide inflation hit 2.0 percent last month, analyst Carsten Brzeski from ING Diba bank said it was hard to share the ECB's "general optimism that underlying inflation in the entire eurozone is picking up".
German inflation has been driven less by the ECB's policies, he said, than by higher energy prices while the cost of consumer goods fell back in July.
"Whether it was the World Cup effect or just the ordinary sales season is hard to tell, but prices for clothing and shoes were the biggest drag on headline inflation," Brzeski noted.
Destatis will release final inflation data for Germany on August 14.
The euro area's July inflation figure will be announced on Tuesday.
Source: Agence France Presse
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