Germany: Harmonized inflation edges down in June
Latest reading: Harmonized inflation inched down to 2.0% in June from May’s 2.1%, matching market expectations, the ECB target and marking the weakest inflation rate since September 2024. The moderation was broad-based, with softer price pressures for food and non-alcoholic beverages plus recreation. That said, costs for restaurants and hotels, transportation plus housing and utilities rose at a stronger pace.
Annual average harmonized inflation fell to 2.3% in June (May: 2.4%). Meanwhile, consumer price inflation fell to 2.0% in June from the previous month’s 2.1%.
Lastly, harmonized consumer prices rose 0.08% in June over the previous month, moderating from May’s 0.15% increase. June’s result marked the weakest reading since January.
Panelist insight: Commenting on the outlook, ING’s Carsten Brzeski stated:
“Looking ahead, at least in the nearer term, German inflation is likely to continue its downward trend, probably dropping below 2% over the coming months. […] Structurally speaking, two opposing trends will shape the future path of underlying inflation. On the one hand, the cooling of the labour market should take away wage pressures and consequently inflationary pressures; on the other hand, the government’s fiscal stimulus is likely to push up inflationary pressure towards the end of the year and beyond.”