Press Inflation rate expected to be +3.8% in July 2021

Press release No. 363 of 29 July 2021

Consumer price index, July 2021:
+3.8% on the same month a year earlier (provisional)
+0.9% on the previous month (provisional)

Harmonised index of consumer prices, July 2021:
+3.1% on the same month a year earlier (provisional)
+0.5% on the previous month (provisional)

WIESBADEN – The inflation rate in Germany, measured as the year-on-year change in the consumer price index, is expected to be +3.8% in July 2021. Based on the results available so far, the Federal Statistical Office (Destatis) also reports that consumer prices are expected to rise by +0.9% on June 2021.

Year-on-year change in the consumer price index
regarding selected product groups
Overall index / subindexWeightApril
2021
May
2021
June
2021
July
2021 1
per thousand percent
1: Provisional figure.
2: Household energy and motor fuels.
3: Net rents and other rents.
Overall index1,0002.02.52.33.8
Goods468.162.63.13.15.4
including:
Energy 2103.837.910.09.411.6
Food84.871.91.51.24.3
Services531.841.62.21.62.2
including:
Rents 3207.261.31.31.31.3

The further increase of the inflation rate in July is caused, in particular, by a base effect: the value-added tax rates were temporarily reduced in July 2020 on account of the coronavirus crisis. Since January 2021, the VAT rates of nearly all goods and services have been back to their previous levels. It is very difficult to quantify the base effect precisely as there are other effects such as CO₂ pricing and the usual market developments. Arithmetically, the effect of the value-added tax reduction in July 2020 amounted to -1.6 percentage points.

The coronavirus pandemic, the associated restrictions on public life and the resulting consequences required a changed approach to the annual updating of the product weights used in the harmonised index of consumer prices (HICP). A methodological paper which discusses this issue is provided on the webpage of the Federal Statistical Office. The updating of the HICP product weights explains a considerable part of the difference between the CPI and the HICP for Germany.

The situation of price collection caused by the corona crisis was getting less tense in July 2021 as the shop-based retail business and food service and accommodation establishments were largely open or could offer their services again. For information on the consequences of the lockdown for price collection please refer to our methodological paper on the impact of the coronavirus pandemic on price collection.

The final results for July 2021 will be released on 11 August 2021.

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