German inflation hits a new all-time high due to the surge in energy prices. The consumer price index, calculated according to the harmonized standards of the European Union, marks a + 8.8% per year in August from + 8.5% the previous month. The reading is in line with the Bloomberg consensus.
“Judging by the available regional inflation components, the downward pressure of the government’s energy aid package and slightly lower oil prices was more than offset by higher gas and electricity prices, higher food prices and higher prices for leisure and packaged holidays, ”he comments Carsten Brzeskiglobal head of Macro at Ing, who sees headline inflation rising further and approaching 10% by the end of the year.
The current ones discounts on petrol and public transport they will end tomorrow and the Scholz government is hard at work for new measures to mitigate the impact of expensive energy.
“Even though the pricing power in both industry and services seems to have peaked – adds Brzeski – we still expect the passage of higher costs to last for a few more months. The sharp rise in wholesale gas prices will be passed on to customers in the coming months and the announced gas tax will raise prices and push inflation up ”.
The Bundesbank estimates Germany’s inflation to reach around 10% in the last quarter of 2022 with highly uncertain prospects due to the “unclear situation” on the commodity markets.
Tensions are growing ahead of the ECB meeting
Strong inflationary pressures in the major European economy that keep the debate hot about the possibility that the ECB will opt for a jumbo hike of 75 basis points on 8 September.
Austria’s Robert Holzmann, a key member of the 25-member ECB Governing Council, said a step of 50 basis points should be “the minimum” in the September 8 decision. In Jackson Hole Holzmann himself specified that 75 basis points “should be part of the debate”. Dutchman Klaas Knot expressed himself in the same way.
Yesterday, however, the chief economist of the ECB, Philip Lane, indicated a preference for a “constant pace” in raising rates, thus not conforming to the positions that emerged from some ECB hawks that in the past week fueled expectations about a possible maxi-rise 75 basis points at the next meeting on 8 September.
On Friday, Reuters reported that a group of ECB officials support the discussion in favor of a 75 basis point hike. Traders today assign a probability of almost 50% that the next ECB increase exceeds 50 basis points.