German Inflation Rises in July, Signalling National Increase

Inflation increased across four major German states in July, according to preliminary data released on Thursday, indicating that the country’s overall inflation rate may also rise this month.

Bavaria recorded an inflation rate of 2.8 percent in July, up from 2.5 percent in June. North Rhine-Westphalia, Germany’s most populous state, saw inflation climb to 2.7 percent from 2.1 percent.

Baden-Württemberg reported a rise to 2.5 percent from 2.1 percent, while Lower Saxony’s rate increased to 2.7 percent from 2.5 percent.

The German government expects inflation to accelerate further, forecasting rates of 2.7 percent in 2026 and 2.8 percent in 2027.

Higher energy and raw material costs, partly linked to tensions in the Middle East, have contributed to the upward pressure on prices.

Economists surveyed by Reuters predict Germany’s harmonised national inflation rate will rise to 2.8 percent in July, compared with 2.4 percent in June.

Official national figures are expected later this week.
The data comes ahead of the eurozone inflation report due on Friday.

Analysts expect inflation across the bloc to reach 2.9 percent in July, slightly higher than the 2.8 percent recorded the previous month.

The European Central Bank left interest rates unchanged in July but signalled that further policy tightening could be considered if inflationary pressures continue to grow.

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