Inflation Rises in Four Key German States in July, National Rate Expected to Climb
Inflation Trends and Economic Impact in Germany and the Euro Zone
Preliminary Data from Key German States
BERLIN, July 30 (Reuters) - Inflation rose in four key German states in July, according to preliminary data published on Thursday, suggesting the national inflation rate could also increase this month.
State-by-State Inflation Rates
• In Bavaria, the inflation rate accelerated to 2.8% in July from 2.5% in June. In North Rhine-Westphalia, Germany's most populous state, it rose to 2.7% from 2.1%, while in Baden-Wuerttemberg, it rose to 2.5% from 2.1%. In Lower Saxony, it ticked up to 2.7% from 2.5%.
Factors Driving Inflation
Impact of Global Events
• The war in Iran had pushed up energy and raw material prices in previous months, and the German government now expects inflation to accelerate to 2.7% this year and 2.8% in 2027.
National and Euro Zone Inflation Outlook
Forecasts for Germany
• Economists polled by Reuters are forecasting a harmonised national inflation rate in Germany - the euro zone's largest economy - of 2.8% in July, up from 2.4% in the previous month. National figures will be released later on Tuesday.
Euro Zone Projections
• The German data come ahead of the euro zone inflation release on Friday. Inflation in the bloc is expected to come in at 2.9% in July, slightly above 2.8% in the previous month, according to economists polled by Reuters.
Monetary Policy Response
European Central Bank Actions
• The European Central Bank kept borrowing costs on hold in July but left room for more tightening in the coming months as a widening conflict in the Middle East pushed up energy prices again.
Reporting and Editing
(Reporting by Miranda Murray, editing by Thomas Seythal)
