Annual German inflation slowed sharply in August following a slump in energy costs and moderately lower food prices, the statistics office said Thursday. The cost of living in Europe's biggest economy was 1.5 per cent this month, down from 1.9 per cent in July, according to the preliminary figures released by the Nuremberg-based statistician. Analysts had expected annual inflation to come in at 1.7 per cent in August. Helping to drive the annual inflation rate down was a steep drop-in energy costs, which fell from an annual rate of 2.9 per cent in July to 0.4 per cent this month. Food prices eased from an annual rate of 5.7 per cent in July to 4.9 per cent in August, after accelerating earlier this year as a result of the impact a protracted winter had on Europe's agricultural sector. The European Central Bank has set a limit for annual inflation in the 17-member eurozone of below but close to 2 per cent.
