Germany: Inflation decelerates in May from April
Latest reading: Harmonized consumer prices rose 2.7% on a year-on-year basis in May, following a 2.9% increase in the prior month. This deceleration was mainly due to government measures to cut gasoline prices, which lowered fuel and diesel taxes by about 17% per litre in May and June.
Relative to the prior month’s data, there were milder price pressures for food and non-alcoholic beverages (+1.0% in annual terms vs +1.7% in April), transportation (+6.2% vs +7.1% in April), housing and utilities (+0.8% vs +0.9% in April) and restaurants and hotels (+2.6% vs +3.5% in April). In contrast, price pressures were higher for recreation in May (+2.4% vs +1.2% in April).
Meanwhile, consumer prices were up 2.6% in May, following a 2.9% increase in the previous month.
Lastly, harmonized consumer prices were down 0.13% in May in month-on-month terms, following a 0.56% rise in the previous month.
Panelist insight: Commenitng on the outlook, ING’s Carsten Brzeski stated:
“Looking ahead, we still expect knock-on effects from higher energy prices on transportation costs, food prices and other industrial products over the coming months. In fact, not everyone will benefit from tax rebates. Needless to say, the longer the war in the Middle East and the blockade of the Strait of Hormuz last, the higher the likelihood that the initial energy price shock will not only have knock-on effects but could also be accompanied by additional supply chain frictions and, in turn, a self-enhancing inflationary spiral. So far, both the latest inflation data and the recent decline in inflation expectations suggest that a self-reinforcing inflationary spiral remains a distant prospect.”