German inflation stable in August

FRANKFURT, Sept. 13 : (AFP) – Inflation in Germany remained stable in August, with consumer prices 0.4 percent higher than the same time last year, the federal statistics office Destatis said on Tuesday.The final data confirms a preliminary figure based on just six of Germany’s federal states released at the end of August.

“As in previous months, the low rate of inflation in August was mostly accounted for by falling energy prices,” which shrank by 5.9 percent, Destatis said in a statement.Inflation excluding energy was 1.1 percent, it said.Looking at the rest of the consumer prices basket, food prices grew 0.9 percent compared with August 2015, while prices for other consumer goods shrank 0.6 percent.

Meanwhile, service prices grew 1.3 percent, driven largely by a sharp increase in home rental costs — which represent around 20 percent of household spending — of 1.2 percent.

Using the Harmonised Index of Consumer Prices (HICP) preferred by the European Central Bank, inflation stood at 0.3 percent compared with August last year — a fall of 0.1 percentage points since July.

That was well short of the ECB target of inflation just below 2.0 percent, enshrined in the institution’s mandate as being most favourable to growth.The bank has set interest rates at record lows, bought up hundreds of billions of euros of government and corporate bonds, and offered cheap loans to banks in a bid to stimulate economic growth and drive up inflation.

But even in economic powerhouse Germany, which has outperformed other large eurozone countries like Italy, Spain, and France, inflation remains stubbornly low.

ECB president Mario Draghi insisted in a press conference last Thursday that “our monetary policy is effective” — although he said that the bank stood ready to intervene further if needed.Eurozone consumer prices rose 0.2 percent in August, official data showed, the same rate as in July.