German consumer price inflation remained at euro-era high levels in August, preliminary data showed Thursday, climbing slightly to 3.9 percent on the back of one-off effects related to the coronavirus pandemic, APA reports citing The Guardian.
The end of VAT holiday introduced by the German government to mitigate the impact of pandemic lockdowns on the economy and the rise in the price of oil explained some of the increase, according to federal statistics agency Destatis.
The August 12-month inflation figure was 0.1 percentage point higher than in the previous month, and the highest value in Europe’s top economy since December 1993, when it came in at 4.3 percent.
“The current increase is likely to remain temporary,” said Christine Volk, chief economist at public lender KfW.
A return to inflation under the European Central Bank’s (ECB) two-percent target was likely, she said, but warned that persistent shortages in key components, such as computer chips, could “impact on consumers’ wallets, as companies are likely to pass on the higher costs at least partially”.
The ECB recently raised its inflation target to two percent, and said it would tolerate temporary over-or undershooting of the target before stepping in.
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