German and Spanish inflation remain above #ECB target in July

With price pressures building in the eurozone, the ECB plans to wrap up its lavish bond purchases by the end of the year. But it also said last week that interest rates would remain at record lows through the summer of 2019.

German consumer price inflation, harmonized to make it comparable with data from other European Union countries, remained at 2.1% year-on-year, the Federal Statistics Office said. This was in line with a Reuters poll of analysts and above the ECB target of close to but below 2%.

On the month, EU-harmonized prices were up 0.4%, the preliminary numbers showed. The price increase was mainly driven by higher energy costs while food inflation slowed compared to the previous month, a breakdown of the figures showed.

The statistics office did not provide a flash figure for core inflation but Commerzbank economist Ralph Solveen said that German inflation excluding the highly volatile energy and food components remained unchanged at 1.4%.

“After all, crude oil prices, as their recent main driver, are currently tending to weaken again,” he added.

In Spain, Europe’s fourth-biggest economy, EU-harmonized consumer price inflation remained unchanged at 2.3% year-on-year in July, flash data from the National Statistics Institute in Madrid showed on Monday (30 July).

The eurozone published preliminary July inflation data on Tuesday (31 July), with the annual rate expected to remain unchanged at 2%, according to a Reuters poll. The ECB’s target is close to but just under 2%.