German inflation rises unexpectedly after fall in Russian gas supply

GERMAN inflation edged up unexpectedly in July after a further reduction in gas flows from Russia prompted concerns of even higher energy bills, data showed on Thursday (Jul 28).

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries (HICP), increased by 8.5 per cent on the year, following an 8.2 per cent rise in June, the federal statistics office said, citing preliminary data.

A Reuters poll of analysts had pointed to an overall annual HICP reading of 8.1 per cent in July.

Energy prices were 35.7 per cent higher in July on the same month last year, the office said. Both this and increased food prices - up 14.8 per cent - were driving up inflation considerably, it added.

In non-harmonised terms, Germany's year-on-year consumer price index fell slightly in July to 7.5 per cent from 7.6 per cent the previous month, the data showed.

Earlier on Thursday, the Ifo institute said inflation in Europe's largest economy may have reached its peak, citing a survey that showed the number of German companies planning to increase prices had fallen for the third consecutive month in July. REUTERS