EUR GBP Waits for German Employment Figures

The EUR GBP exchange rate was flat after the latest German inflation figures which showed the highest consumer prices since 1993. Today also sees the release of German employment figures and the eurozone core inflation rate.

The EUR to GBP rate is trading at 0.8575 ahead of the latest European economic data.

Higher energy and food prices pump up German inflation

Germany’s latest consumer price inflation saw a fresh 13-year high in August. Price pressures have hit Europe’s largest economy as it recovers from the pandemic lockdowns and companies struggle with supply chain issue.

Harmonised consumer prices, which is the favoured measure of the European Central Bank, rose 3.4% compared with 3.1% in July. The August reading came in at analysts’ expectations and was at the highest level since July 2008. The core inflation rate soared to 3.9% in August, hitting its highest since December 1993.

“This is due to higher energy and food prices, while the core inflation probably even fell slightly from 2.9% to 2.8%,” Commerzbank analysts said.

The latest figures also outpaced growth in wages, which were 1.9% higher on average from April to June compared to the second quarter in the previous year, the Federal Statistics Office said. The end of VAT measures implemented during the pandemic also had an effect on prices.

“The latest data suggests that wages in Germany will not keep up with inflation in the course of this year,” said Sebastian Dullien of the IMK economic institute.

“In the medium term, however, it would be good for consumer demand if wages rose a little more,” Dullien added.

Economist Elmar Voelker said the inflation rate would rise further in the coming months, but said:

“From the beginning of 2022, price pressures … will probably ebb, but the exciting question will be how quickly and how strong this weakening will be”.

London Underground nears half of pre-virus activity

London Underground usage is slowly reaching half of pre-pandemic levels, Transport for London (TfL) said.

Demand for the Tube service on weekdays is often at 50% of what it was before the coronavirus lockdowns and is hitting more than 60% at weekends. The figures are up from around 40% across the whole week in May before the staged reopening. An average of more than 1.8 million journeys are being made on the Tube during every weekday.

Coronavirus infection levels have risen in all four nations of the UK, with many heading to music festivals over the bank holiday weekend at Reading and Leeds.

The latest snapshot survey by the Office for National Statistics showed that around one in 70 people in England had Covid-19 in the week, up from one in 80 the previous week.

In Wales, the figure was around one in 120 people, the highest level there since February, while in Scotland it was around one in 140. The return of schools in Scotland is believed to have contributed to an increase in infections in the country.

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