Rhineland-Palatine, Mainz: Fruits are sold on the weekly market.
Andreas Arnold / DPA | Photo alliance | Getty images
German inflation dropped more than planned to 1.8% in July, data from the Statistics Agency Destatis showed on Thursday.
Economists interviewed by Reuters had planned that inflation decreases to 1.9%. July reading compared to the printing of 2% recorded in June, which brought the German inflation rate in accordance with the objective of the European Central Bank.
The figures are harmonized in the euro zone to ensure comparability. The area inflation data in euros are due later this week, the reading forecasts at 1.9%.
The so -called basic inflation, which removes food and energy costs, has reached 2.7% in July, unchanged from the previous month, showed the data. Meanwhile, the impression of the inflation of closely watched services rose from 3.3% in June to 3.1% in July.
Carsten Brzeski, Macro World Manager at ING, said in a note Thursday that the latest data suggested that Germany is currently experiencing a disinflation process “. The inflation of the headlines should now stay below, but near the 2%mark, he added.
Inflation figures are closely monitored by economists and analysts as they assess the pricing policy of US President Donald Trump. Several sectoral prices, as well as a temporarily reduced reduction, have already been in effect in recent months.
Last week, the European Union and the United States concluded an agreement that includes EU property with prices of 15%. Although the samples are largely supposed to affect prices in the United States, it is less clear if and how, inflation elsewhere can be affected.
“It remains to be seen how European and American companies will react to the American prices. Although a scenario can see prices drop in the euro zone due to over-capacity and lower sales in the United States, global operating companies could try to increase prices in Europe in order to compensate for profits in the United States,” said Brzeski.
Thursday’s inflation figures come just after Destatis published a preliminary reading of the gross domestic product in the second quarter of Germany on Wednesday. The economy decreased slightly by 0.1% during the period, marking a drop in the growth of 0.3% recorded in the first quarter.
