Germany: Harmonized inflation eases in May
Harmonized consumer prices rose 0.3% month-in-month in May, down from the 1.0% increase logged in April. May’s moderation came on the back of softer price increases for alcoholic beverages and tobacco; utilities; and transport, while prices for clothing and footwear; communication; recreation and culture; and education fell.
Harmonized inflation, meanwhile, decelerated from 2.1% in April to 1.3% in May; annual average harmonized inflation inched down to 1.9% from 2.0%. Lastly, annual average consumer price inflation was stable at April’s 1.8% in May.
Commenting on inflation developments in Germany, Carsten Brzeski, chief economist at ING Germany, noted that core inflation remains subdued in the country, and in fact, the eurozone with recent data showing “that core inflation […] is still moving sideways and actually has been doing so since 2015. The ECB’s hope that headline inflation would move towards the ECB’s medium-term aim is increasingly being derailed rather than delayed. In fact, if it were not for oil prices, the last years of monetary stimulus have avoided a further drop in underlying inflation but have not succeeded in bringing inflation close to target.” Brzeski continued to state that “as a consequence, even though it’s not our base case, additional easing measures over the summer should not be ruled out.”