Inflation in Germany fell to 6.2 percent in July, after a slowdown in consumer price growth was interrupted in the previous month, the Federal Statistical Office (Destatis) confirmed.
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"The rate of inflation has fallen slightly but remains at a high level," said Destatis President Ruth Brand. Food prices in particular continue to have an "upward effect" on overall inflation, she added, with an increase of 11 percent year-on-year.
Prices for energy products rose below inflation at 5.7 percent, according to the figures. Although electricity prices picked up again to 17.6 percent, prices for light heating oil plummeted by more than a third.
Destatis said that the accelerated rise in electricity prices was mostly caused by a base effect from the abolishment of the Renewable Energy Sources Act (EEG) levy one year ago. German consumers had been directly supporting the country's transition to renewable energies through a surcharge on electricity bills since 2000.
Consumer sentiment in Germany remains at a low level, but has stabilized, with the forward-looking consumer climate for August by market research institute GfK improving slightly to minus 24.4 points.
"The main reason for the dwindling pessimism is the hope of declining inflation rates," GfK expert Rolf Buerkl said at the end of July.
However, as consumer sentiment is expected to remain at a low level in the coming months, private consumption would "not be able to make a positive contribution to overall economic development," Buerkl warned.
After a technical recession with two consecutive quarters of economic contraction, Germany's gross domestic product stopped declining in the second quarter of 2023, according to preliminary figures by Destatis.
"There are slightly positive trends in private consumption and investment, but this is not enough, and it is anything but satisfactory," Minister for Economic Affairs and Climate Action Robert Habeck said at the end of last month.
German consumer prices are normalizing more slowly than elsewhere in Europe, as inflation in the eurozone is expected to fall to 5.3 percent in July, according to the European statistical office Eurostat.
With its latest key rate hike to 4.25 percent, the European Central Bank (ECB) is looking to push inflation in the eurozone back below its 2 percent target.
"While some measures show signs of easing, underlying inflation remains high overall," ECB President Christine Lagarde has said. ■