German Inflation Rises in Key States Ahead of National Data

Inflation increased across four major German states in July, according to preliminary figures, signalling that the country’s national inflation rate is also likely to rise. Bavaria, North Rhine-Westphalia, Baden-Wuerttemberg and Lower Saxony all reported higher inflation compared with June, reflecting continued price pressures.

The German government expects inflation to average 2.7% this year and 2.8% in 2027, citing higher energy and raw material costs linked to the conflict involving Iran. Economists surveyed by Reuters also expect Germany’s harmonised national inflation rate to climb to 2.8% in July, up from 2.4% the previous month.

The latest figures come ahead of the euro zone’s inflation data, which is also expected to show a slight increase. The European Central Bank recently kept interest rates unchanged but indicated that further monetary tightening remains possible if inflationary pressures, particularly from rising energy prices, continue.

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