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Germany sees highest inflation rate of 2013

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(Globalpost/GlobalPost)

The rate of inflation in Germany, Europe's biggest economy, continued to climb in July to reach the highest level seen this year, provisional official data showed on Tuesday.

The cost of living rose 1.9 percent this month on a 12-month basis, up from 1.8 percent in June, the federal statistics office said.

It put the rise down to a spike seen each year at the start of the summer holidays, which drive up the cost of items such as petrol and hotel stays.

Populous states such as North Rhine-Westphalia and Bavaria also saw a marked rise in food prices.

Using the Harmonised Index of Consumer Prices (HICP), the European Central Bank's inflation yardstick, the rate of inflation in Germany was also measured at 1.9 percent in July.

The ECB defines price stability as increases in HICP of close to but just below 2.0 percent.

Annalisa Piazza of Newedge Strategy said the figure was higher than expected but still gave the European Central Bank room to manoeuvre to stimulate the ailing economy.

"Some volatility might prevail in the coming months but EMU inflation is set to remain well below the two-percent mark, leaving the door open to further policy accommodation in the coming months, if needed," she said.

Christian Schulz of Berenberg Bank agreed the higher German inflation rate was likely to persist but was no cause for concern.

"Inflation is likely to fall again soon when food prices normalise," he said.

"At the same time, German inflation has gradually risen above the eurozone average and is likely to stay there while the crisis countries rebuild their competitiveness."

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http://www.globalpost.com/dispatch/news/afp/130730/germany-sees-highest-inflation-rate-2013-0