German August CPI steady in August

Headline German inflation held steady in August, but economists projected that price growth would pick-up again over the very short-term.

The rate of increase in consumer prices was unchanged at 0.4% year-on-year, according to the Federal Office of Statistics.

That was in-line with forecasts from economists before the data was released.

Increases in the cost of living were held back as food inflation slipped from a 1.1% year-on-year pace to 0.9%, followin a surge in recent months.

Going the opposite way were household energy prices, which fell at a 4.2% year-on-year clip, up from the 4.7% decline seen in the month before.

The 'core' measure of inflation, which strips out food and energy, slipped from a 1.3% year-on-year pace to 1.2% due mainly to slower gains in the prices of leisure and consumer goods, Pantheon Macroeconomics's Claus Vistesen explained in a research note sent to clients.

When compared to July, the headline CPI and that which excludes household energy were both flat, with the former having risen 0.3% in the month before.

"Overall, we think inflation pressures in Germany are rising modestly and that the headline rate will increase to about 1.5% in the next six-to-12 months, mainly as base effects reduce the year-over-year drag from energy prices," Vistesen said.

In harmonised terms, the CPI dipped 0.1% month-on-month in August and rose by 0.3% on the year, both were in-line with economists' forecasts.