The German authorities expect that the recent acceleration in inflation in the country will be temporary, as it is largely due to special factors that will disappear early next year. According to the country's Federal Bureau of Statistics (Destatis), annual consumer price inflation in Germany has accelerated more than expected and peaked since 1993. The figure, according to final estimates, rose to 3.8% in July from 2.3% in June. The main reason for the jump in inflation was the base effect from a temporary reduction in VAT rates in the second half of 2020. Moreover, the department expects that inflation will slow down significantly after this effect disappears. «There are now no signs of a wage-price spiral that could lead to persistent high inflation,» the Economy Ministry said. The ministry also noted that the service sector benefits from the easing of coronavirus restrictions, while the manufacturing sector is struggling with supply chain bottlenecks.
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