Key Takeaways
- Germany's annual inflation rate held steady at 2.0% in July 2025, aligning with expectations and marking an eight-month low.
- The Harmonised Consumer Price Index (HICP) for Germany also remained stable at 1.8% year-on-year in July, consistent with forecasts.
- In a significant policy statement, US Treasury Secretary Scott Bessent indicated that Chinese investments in critical US industries would not be part of future trade deals, emphasizing the need to reshore these sectors away from China.
- German wholesale prices saw a modest increase in June 2025, rising 0.9% year-on-year and 0.2% month-on-month, driven by higher food and beverage costs.
German inflation figures for July 2025 showed stability, with the annual Consumer Price Index (CPI) holding firm at 2.0%, matching both estimates and the previous month's rate. This marks the lowest inflation level in Germany since last October. On a monthly basis, the national CPI increased by 0.3% in July, following a stagnant performance in June, primarily influenced by rising travel costs.
The European Union-harmonised CPI (HICP) for Germany mirrored this stability, registering a 1.8% year-on-year increase in July, precisely as estimated and unchanged from the prior month. Monthly HICP rose by 0.4%. A deeper look into the components reveals that energy prices continued their downward trend, falling 3.4% year-on-year in July, while services prices climbed 3.1% and food prices increased 2.2%. Core inflation, which excludes volatile food and energy prices, remained consistent at 2.7% annually in June.
Meanwhile, Germany's wholesale price index for June 2025 showed a slight uptick. Wholesale selling prices were 0.9% higher than in June 2024, an acceleration from the 0.4% increase seen in May. Month-on-month, wholesale prices edged up by 0.2% in June. This increase was largely attributed to higher prices in categories such as food, beverages, and tobacco, which saw a 4.2% rise from the previous year.
In a separate but economically significant development, US Treasury Secretary Scott Bessent articulated a firm stance on future trade relations with China. Bessent stated that Chinese investments in critical US industries would not be considered part of any trade deal, a departure from previous discussions. He emphasized that funds from buyouts would be directed towards reshoring vital industries, specifically away from China. This policy aims to bolster domestic manufacturing in sectors deemed critical, such as semiconductors, rare-earth magnets, pharmaceuticals, and steel, underscoring ongoing geopolitical competition and a strategic shift in US trade policy.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.