Germany: Harmonized inflation comes down in June on the back of the government's relief package
June 29, 2022
Harmonized consumer prices dropped 0.08% from the previous month in June, contrasting the 1.11% rise recorded in May.
Harmonized inflation came in at 8.2% in June, easing from May’s 8.7%. This is in part due to the relief package from the government that came into force on 1 June, bringing down energy price pressures. Meanwhile, the trend pointed up, with annual average harmonized inflation coming in at 5.9% in June (May: 5.3%).
Commenting on the inflation outlook, Carsten Brzeski, global head of macro at ING, added:
“This is not a turning point—yet—but rather evidence that it is currently governments and not central banks that can bring down inflation. […] The energy relief package will end in August. This will also be the moment when the temporary relief to headline inflation stops. Even if pricing power both in industry and services should have reached its peak, we still expect the pass-through from higher costs to last at least over the summer months if not longer. The potential end to Russian gas for Germany is also likely to increase energy prices going into the winter season. This makes any significant retreat of headline inflation highly unlikely for 2022. It will take until 2023 before negative base effects should send the headline rate towards 2% again.”