Germany's Federal Statistical Office (Destatis) reported on Thursday the country’s consumer price index (CPI) is expected to increase 0.9 percent m-o-m in July after rising 0.4 percent m-o-m in the previous month.

On the y-o-y basis, Germany’s CPI is seen to surge 3.8 in July, following a 2.3 percent climb in June. This represents the largest advance since December 1993, caused, in particular, by the value-added tax effect, as the German government cut the tax rates temporarily in July 2020 as a part of its support to the pandemic-hurt economy.

Economists had predicted inflation would rise 0.5 percent m-o-m and 3.3 percent y-o-y in July.

According to the report, food prices surged 4.3 percent y-o-y in July after a 1.2 percent y-o-y gain in June. Energy prices jumped 11.6 percent y-o-y after a 9.4 percent y-o-y climb in the previous month. Services costs rose 2.2 percent y-o-y, accelerating from 1.6 percent y-o-y in June.

Meanwhile, the harmonized index of consumer prices for Germany (HICP), which is calculated for European purposes, is expected to advance 0.5 percent m-o-m and 3.1 percent y-o-y.