In its monthly report, Germany's central bank noted that the effect of gas and electricity price brakes on inflation will reverse once they expire. "The inflation rate could stay in double digits also beyond the turn of the year," the Bundesbank added.

"From a macroeconomic perspective, it makes it easier to return to lower wage increases when the temporary components expire," the publication further read. "This could reduce the extent of second-round effects on the inflation rate, especially in the medium-term, and help ensure that the current high inflation rates do not further solidify."

Market reaction

EUR/USD showed no immediate reaction to this report and was last seen trading modestly higher on the day at 1.0317.