Germany's annual inflation rate accelerated to 2.8 percent in July, up from 2.3 percent in June, as the expiry of a government fuel tax cut and surging energy costs pushed consumer prices higher. The harmonised index of consumer prices also rose to 2.8 percent, confirming a preliminary estimate.
Energy prices climbed 8.3 percent year-on-year, driven largely by a 23 percent jump in fuel costs after the government's temporary 17-cent-per-litre tax reduction on petrol and diesel ended on June 30. Destatis president Ruth Brand said energy prices continued to rise at an above-average pace, remaining a central driver of inflation. Core inflation, excluding energy and food, stood at 2.4 percent.
Service prices rose 2.9 percent, while food prices edged up just 0.4 percent. Fuel prices have returned above two euros per litre, compounded by a de facto blockade of the Strait of Hormuz and drought-related logistics costs, according to the ADAC.