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German inflation increases unexpectedly as the gas shortage worsens

German inflation unexpectedly rose in July, owing to an energy supply crisis, as a further drop in Russian gas flows raised concerns about further higher energy expenses.


Consumer prices harmonised to be comparable with inflation data from other European Union nations (HICP) grew by 8.5 percent year on year, according to preliminary data released by the federal statistics office on Thursday.


‘The rise in HICP inflation is a danger sign for the European Central Bank,’ says Carsten Brzeski, an economist at ING. This number is used by the ECB to calculate consumer price inflation.


On Friday, the first measurement of July inflation for the eurozone as a whole is due. Consumer price increase in the eurozone’s 19 member countries reached a new high of 8.6 percent year on year in June, led by rising energy and food prices.


Analysts polled by Reuters predicted an annual HICP reading in Germany of 8.1 percent in July, up from 8.2 percent in June.


In non-harmonised terms, Germany’s consumer price index declined marginally in July to 7.5 percent from 7.6 percent in June.


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