German inflation dips in August

27th August 2010, Comments 0 comments

Inflation in Germany remained subdued in August, official data showed on Friday, despite signs that demand in Europe's biggest economy is picking up rapidly following a crippling recession.

Prices rose 1.0 percent in August compared to the same month a year ago, the national statistics office said.

In July, inflation hit a year high of 1.2 percent but this was still well within the European Central Bank's threshold of close to but below two percent.

Higher energy prices, in particular for heating fuel, were the key drivers of inflation in August, Destatis said.

Germany posted spectacular second quarter growth figures of 2.2 percent sequentially and the central bank has forecast a full-year expansion of around 3.0 percent.

With inflation in Europe's top economy subdued, the ECB is likely keep its main interest rate at a record low of 1.0 percent well into 2011, economists say.

© 2010 AFP

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