German inflation inches up in August

Growth in energy & food costs speeds up

FRANKFURT AM MAIN, Aug 30, (AFP): The pace of inflation in Germany increased slightly in August, preliminary official figures showed Wednesday, inching closer towards the European Central Bank’s eurozone-wide target.

Consumer prices rose by 1.8 percent year-on-year this month in Europe’s largest economy, federal statistics authority Destatis reported.

August’s rate of price growth was 0.1 percentage points higher than in July, in line with predictions from analysts surveyed by data company FactSet.

Using the ECB’s preferred yardstick, the Harmonised Index of Consumer Prices, inflation picked up 0.2 percentage points compared with July’s level to reach 1.8 percent.

That pace is near the Frankfurtbased institution’s target of close to, but below 2.0 percent for the whole 19-nation euro area.

Looking at the different elements of the consumer price basket, growth in energy and food costs sped up, with energy inflation hitting 2.3 percent after a slump to zero in June.

Meanwhile, price growth in services including home rents slowed, while the cost of goods increased slightly faster in August than in July at 2.0 percent.

The ECB’s mass bond-buying programme and historic low interest rates are designed to encourage lending, promoting growth and driving inflation towards the bank’s target.

Central bank chiefs have in recent months highlighted the importance of core inflation — excluding volatile food and energy costs — as a measure of the effectiveness of their easy-money policy.