German Inflation Hits 2.8% in July; Economists Warn of More Increases

German consumer prices rose by 2.8% in July compared with the same month last year, according to preliminary data released on Monday. The figure marks an acceleration from the 2.2% annual rate recorded in June, signaling that inflationary pressure in Europe’s largest economy is building again. The increase was driven primarily by higher costs for services, including restaurant meals and insurance, while energy prices also edged upward after months of decline. Food prices, by contrast, rose at a slower pace than in previous months. Economists said the latest reading was higher than market expectations and warned that the trend may not be over. They pointed to rising wage demands, a recovering tourism sector, and base effects from last year’s temporary government subsidies as factors that could push inflation above 3% in the coming months. The German statistics office noted that the July figure is a preliminary estimate, with final data due later this month. The European Central Bank, which targets inflation at 2% across the eurozone, is watching the German numbers closely as it decides whether to cut interest rates further. For now, consumers are feeling the pinch. A separate survey showed that household confidence remains weak, with many families planning to cut back on non-essential spending. Analysts say that if inflation keeps climbing, the ECB may pause its easing cycle, keeping borrowing costs higher for longer.