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German consumers must brace for higher food costs in the coming months, the Munich-based research centre, the ifo Institute, said.

With almost all food retailers planning further price increases, as well as retailers in other sectors, head of forecasts at ifo Timo Wollmershaeuser said on Friday that inflation rates are expected to "remain high for the time being".

Overall consumer prices in Germany slowed down in June, with inflation falling to 7.6 per cent, according to preliminary figures by the Federal Statistical Office (Destatis). Energy prices continued to be the main driver, but food prices were also up 12.7 per cent year-on-year.

Back in May, inflation in Europe's largest economy peaked at 7.9 per cent, the highest level since the first oil crisis in the winter of 1973/1974, according to Destatis.

A growing number of German consumers is troubled by rising prices, with 40 per cent saying that high inflation is causing "major problems," according to the latest Politbarometer survey.

Consumer sentiment in the country is "continuing its downward spiral," the Nuremberg-based market research institute GfK warned earlier this week. The increased cost of living in particular is lowering available income.

In order to push record inflation rates across Europe below the target of 2 per cent in the medium term, the European Central Bank (ECB) announced it will raise its key interest rate by 25 basis points in July, Xinhua news agency reported.

"I don't think we are going to go back to that environment of low inflation," said ECB President Christine Lagarde at the European Central Bank Forum in Sintra, Portugal on Wednesday.