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Germany's inflation rate jumped to the highest level since 2008 as coronavirus restrictions were lifted and the economy reopened.
The July increase to 3.1% exceeded economists' estimates for a 2.9% reading and will likely fuel the debate over whether the surge in inflation will ultimately fade.
Price are being boosted by several special factors, such as a reversal of last year's sales-tax cut and changes to the basket of goods and services.
Germany's Bundesbank has said that inflation in the country could climb as high as 4% this year, a level not seen since the euro was introduced more than two decades ago.
While many of the driving forces are temporary -- a point repeatedly made by the European Central Bank -- the data will raise questions whether policy makers need to start removing stimulus faster than anticipated.
What Bloomberg Economics Says...“German inflation is heading for a sizzling second half of 2021 -- possibly reaching 5% once the statistical distortions from changes to HICP weights reverse in the winter.” --Björn van Roye, senior economist. Click here for full REACT |
The German reading comes after figures earlier Thursday from Spain also showed an acceleration. Data for France, Italy and the euro area are due Friday.
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