Germany's Inflation Rate Expected to Rise in Key States

Germany's inflation rate is expected to rise in July, with preliminary data indicating that four key states saw an increase in prices. In Bavaria, the inflation rate accelerated to 2.8% in July from 2.5% in June, while North Rhine-Westphalia experienced a rise to 2.7% from 2.1%. Baden-Wuerttemberg and Lower Saxony also saw higher inflation rates, reaching 2.5% and 2.7%, respectively.

The ongoing war in Iran has driven up energy and raw material prices, contributing to Germany's rising inflation rate. The German government forecasts inflation at 2.7% for this year and 2.8% in 2027. Economists polled by Reuters are also predicting a harmonised national inflation rate of 2.8% in July, up from 2.4% in the previous month.

The European Central Bank kept borrowing costs steady in July but indicated possible tightening ahead due to ongoing energy price increases.