Germany’s annual inflation rate increased to 2.9% in August from 2.8% in July and 2.3% in June, the Federal Statistical Office reported on Monday, citing preliminary data.
Energy prices rose 7.5% year-over-year, down from an 8.3% increase in July, but still a major contributor to the headline figure. The resurgence of conflict in the Middle East has pushed oil prices higher, while drought conditions along the Rhine have compounded supply pressures. In North Rhine-Westphalia, heating oil prices surged 33.6% year-over-year, diesel climbed 35.6%, and gasoline prices jumped 24%. Month-over-month, fuel prices in the state increased 2.6%, partly attributed to the low water levels on the Rhine, which disrupted barge shipments to refineries.
Food prices rose 0.1% year-over-year, easing from a 0.4% gain in July. Services inflation remained elevated at 2.8%, while core inflation—excluding food and energy—held steady at 2.4%. On a monthly basis, consumer prices increased 0.2% from July.
The inflation reading follows disruptions to Europe’s busiest inland waterway, where record-low water levels have constrained cargo transport. Barge deliveries are critical for refinery operations in industrial regions such as North Rhine-Westphalia, where energy-intensive industries are concentrated.
Across the euro area, inflation in August also exceeded the European Central Bank’s 2% target in France and Spain. The ECB’s July meeting minutes suggested policymakers may raise interest rates again in September, from 2.25% to 2.50%, contingent on incoming data. The central bank had paused its tightening cycle in July after its first hike in nearly three years in June.
The ECB’s policy stance remains data-dependent, with officials noting that further tightening may be necessary if inflation pressures fail to abate.
