German Consumer Prices Increased Further in August in Line With Forecasts -- Update

By Maria Martinez

German consumer prices rose strongly in August, confirming preliminary data, statistics office Destatis said Friday.

Consumer prices rose 3.9% on year measured by national standards, in line with the forecast of economists polled by The Wall Street Journal. They rose 3.4% on year by European Union-harmonized standards, also in line with forecasts.

A higher inflation rate was last measured in December 1993, when it reached 4.3%, Destatis said.

The increase in the inflation rate is mainly due to the base effects due to low prices in 2020, the statistics office said.

"The temporary value added tax reduction and the sharp decline in mineral oil product prices in 2020 will continue to have an upward effect on the year-on-year overall inflation rate until the end of 2021," Destatis's head of consumer prices section Christoph-Martin Mai said.

Additional factors are the introduction of carbon-dioxide pricing as of January 2021 and pandemic-related effects, such as marked price increases in the economic recovery, he said.

Consumer prices remained unchanged on month by national standards and increased 0.1% by EU-harmonized standards, both in line with forecasts.

Prices of goods increased 5.6% on year and food prices rose 4.6%, Destatis said.

Energy-product prices were 12.6% higher than a year earlier, after an 11.6% rise in July. Marked price increases were recorded for heating oil and motor fuels in August, the statistics office said.

The on-year increases in energy product prices and food prices had a clear upward effect on the inflation rate. Excluding energy product prices, the inflation rate would have been 3.0% in August and excluding the prices of both product groups, it would have been 2.8%, Destatis estimated.

The prices of services increased 2.5% in August compared with the same month of the previous year, Destatis said.

The price collection problems caused by the coronavirus pandemic in the previous months were less severe in August, as the shop-based retail business and food service and accommodation establishments were largely reopened or could offer their services again, Destatis said.

Write to Maria Martinez at [e-mail]

(END) Dow Jones Newswires

09-10-21 0240ET