BERLIN, Aug. 12 (Xinhua) -- Germany's inflation rate accelerated from the previous two months to reach 2.8 percent in July, official data showed Wednesday, while economists warned that record-low water levels on the Rhine could add further price pressures in the coming months.
"Energy prices continued to increase at an above-average rate and therefore remained the key driver of inflation," said Ruth Brand, president of the Federal Statistical Office (Destatis). Germany's inflation rate stood at 2.3 percent in June and 2.6 percent in May respectively.
Brand said the sharp rise in motor fuel prices was driven by higher oil prices resulting from the ongoing war in the Middle East as well as the expiry of the government's temporary fuel tax cut at the end of June.
The German government introduced a two-month tax cut on petrol and diesel in May, reducing taxes by around 17 euro cents (0.2 U.S. dollars) per liter. The measure helped cushion the impact of higher oil prices on consumers through June.
Energy prices rose 8.3 percent year-on-year in July, significantly faster than the 3.4-percent increase in June and 6.6-percent rise in May, when the fuel tax cut was in effect, according to Destatis.
Germany had already experienced a sharp energy-driven inflation surge earlier this year. In April, disruptions to global oil supplies by the war in the Middle East and the closure of the Strait of Hormuz sent oil prices sharply higher, pushing German inflation to 2.9 percent, its highest level since January 2024.
Meanwhile, persistently low water levels on the Rhine, caused by prolonged drought and extreme heat across Europe, are creating fresh inflation risks. Water levels at Kaub, a key shipping choke point on the Rhine, have fallen to record lows, severely restricting cargo transport along Germany's most important industrial shipping route.
Simon Gerards Iglesias, an economist at the German Economic Institute (IW), said low river levels could eventually feed through into higher energy and goods prices and directly affect consumer prices, as vessels are forced to carry less cargo and transport times increase.
He also warned that refineries along the Rhine could struggle to receive sufficient crude oil in time, affecting the production and distribution of petrol and diesel and adding further upward pressure on fuel prices.
Felix Schmidt, economist at Berenberg Bank, estimated that persistent low water levels on the Rhine could temporarily add as much as 0.5 percentage points to Germany's inflation rate. ■