By Maria Martinez
BERLIN (Reuters) – German inflation accelerated more than expected in August, bringing an end to the disinflationary process of the last months and adding to the gloom on a day when unemployment topped three million for the first time in a decade.
Inflation rose to 2.1%, preliminary data from the federal statistics office showed on Friday. Analysts polled by Reuters had forecast EU-harmonised inflation increasing to 2.0% from last month’s 1.8%.
The German data comes ahead of the release of euro zone inflation next Tuesday, which is expected to have remained stable at 2.0% in August, according to economists polled by Reuters.
The data from Germany, France, Italy and Spain also suggest that inflation remained roughly unchanged, sticking close to the target rate in August again.
“The European Central Bank has no reason to change its policy rates at the moment,” said Salomon Fiedler, economist at Berenberg.
The ECB left its key rate at 2% at its last meeting and it will probably do so again next month before discussions about further cuts likely resume in the autumn, especially if the economy weakens under U.S. tariffs, sources told Reuters.
Carsten Brzeski, global head of macro at ING, did not rule out another interest rate cut, on the grounds that it would not do any harm and could eventually do some good.
“Admittedly, though, today’s German inflation data has not strengthened the case for a rate cut in September,” he added.
Germany’s core inflation rate, which excludes volatile food and energy prices, remained unchanged at 2.7% in August for the third month in a row.
“It therefore remains stubbornly above the ECB’s target,” said Ralph Solveen, senior economist at Commerzbank. He added, however, that the core inflation rate was expected to resume its slight downward trend in the coming months.
Services inflation also remained unchanged at 3.1% in August, while goods inflation accelerated to 1.3% from 1.0% in the previous month.
(Additional reporting by Rachel More and Miranda Murray; Editing by Ludwig Burger and Gareth Jones)
