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Inflation

German inflation rate reaches highest level in the year

Inflation in Europe's largest economy has risen to a new high this year on the back of soaring prices for a wide range of food items. But in line with the ECB's yardstick, German price stability is not yet jeopardized.

The cost of living in Germany rose by 1.9 percent in July, compared to the level reached in the same month a year earlier.

The Federal Statistics Office, Destatis, reported Tuesday inflation had thus reached a new high this year, although it only rose by a marginal 0.5 percent month-on-month.

The pickup in the rate was driven primarily by rising prices for holiday trips and flight tickets in particular. A hefty increase in food prices, which surged by 5.7 percent in year-on-year comparison, also played a role.

Saving money a losing game

German consumer confidence intact

Potato prices for instance rose by a staggering 44.4 percent, while consumers had to spend over 30 percent more on butter and almost 12 percent more for vegetables.

But price hikes did not occur across the board. Among the items that were considerably cheaper in July were coffee and consumer electronics products.

For the European Central Bank (ECB), Germany's current inflation rate does not yet send out an alarming signal as it still stands below the lender's yardstick of 2 percent, which it defines as a threshold for price stability.

But experts have warned that Germans are currently losing money by the day, with record-low interest rates on capital staying way below the inflation rate in the country.

hg/dr (dpa, AFP)

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