Two weeks ago, the latest consumer price index data from Germany showed that inflation accelerated to its highest level in seven years in September. The official data which was released by the statistics agency, Destatis, showed that consumer prices rose 2.3% on the year.
This was the fastest pace of increase in consumer prices since November 2011 when inflation reached 2.4%. Consumer prices increased by 2% in August this year.
On a month over month basis, Germany’s inflation matched the median estimates, rising 0.4% in September. This was slightly higher compared to August’s reading of 0.1%. The data was consistent with the flash estimates that were released in late September.
The increase in inflation came due to higher fuel prices, as is the case with inflation reports in recent months and in the third quarter of the year. Excluding fuel prices, the core inflation rate rose 1.6% on the year ending September.
Meanwhile, the harmonized index of consumer prices or HICP rose 2.2% on the year in September advancing from the 1.9% increase seen the month before. This was also the fastest pace of increase in four months.
On a monthly basis, the HICP advanced 0.4%, matching the initial estimates.
Germany ZEW Economic Confidence Weakens in October
While inflation data might have brought some cheer, the economic confidence data released by the German institute ZEW painted a bleak picture. The forward-looking indicator showed that economic confidence had weakened in October.
The economic sentiment index which measures the economic confidence, fell by 14.1 points to -24.7 for the month. This was below estimates which showed there would be a modest decline to 12. The economic sentiment index touched the same level as it did in July earlier this year.
The assessment of the current economy fell by 5.9 points to 70.1 which was also below the median estimates of 74.4. The ZEW President, Achim Wambach said that the expectations for Germany had dampened due to the intensifying trade disputes between the U.S. and China.
“A further negative influence on economic and export expectations is the danger of a ‘hard Brexit,’ which is becoming ever more likely,” the ZEW President said. Economic confidence for the Euro area fell 12.2 points to -19.4 for October while the indicator for the current economic situation rose 0.3 points to 32.
Import prices steady at 4.8%
Germany also released the import price data last week. The official data showed that import prices held steady for the month of August.
Germany’s import prices rose 4.8% on the year in August. This marked the same pace of increase that was seen in July. Economists forecast that import prices would rise 5.2% for the period. The increase in import prices came due to a 33.2% surge in energy imports.
Excluding crude oil and other mineral oil products, imports prices rose 2.5%.
On a monthly basis, import prices remained flat and matched expectations. Import prices fell 0.1% in July.
Export prices, on the other hand, rose 2.1% in August. This was a modest improvement from 1.7% increase registered in the previous month. On a month over month basis, export prices rose from July 0.1% to 0.2% in August.
Manufacturing employment rises
Preliminary reports from Destatis showed that German manufacturing firms were adding more employees during the month of August when compared to one year ago. The number of employees at manufacturing firms with 50 or more people rose to 149,000 or about 2.7% from the same period last year.
The number of hours worked also increased by 1.8%.
Most recently, German authorities cut their growth forecasts. The lower revised forecasts came mostly due to the shortage of skilled labor. Official forecasts show that Germany’s GDP is expected to rise 1.8% this year, down from previous estimates which projected a 2.3% growth rate.