Germany Inflation June 2019


Germany: Harmonized inflation ticks up in June

July 11, 2019

Harmonized consumer prices increased 0.3% month-on-month, matching May’s print. The June’s result was mainly attributable to a sharp jump in recreation and culture prices; all other components saw cheaper prices or softer price growth from May. Clothing and footwear became noticeably cheaper while transportation costs also dropped, owing to a notable fall in oil prices.

Harmonized inflation, meanwhile, ticked up to 1.5% in June from 1.3% in May and annual average harmonized inflation was stable at May’s 1.9% in June. Lastly, consumer price inflation came in at 1.6% in June, up from 1.4% in May while annual average consumer price inflation edged down to 1.7% from 1.8% in May.

Commenting on the result, Carsten Brzeski, chief economist at ING Germany, stated that “the strong fluctuation of leisure costs as a result of the timing of vacation and public holidays has been one of the main drivers of German headline inflation in recent months. It almost looks as if the country has become a leisure republic, given the sensitivity of headline inflation to just one single component.”

Going forward, harmonized inflation is expected to pick up in the second half of the year. FocusEconomics Consensus Forecast panelists expect harmonized inflation to average 1.4% in 2019, which is unchanged from last month’s forecast. For 2020, our panel sees average inflation at 1.6%. This is largely in line with the Bundesbank projections of June 2019. While the Bundesbank kept its forecast for harmonized inflation in 2019 unchanged at 1.4%, it revised down its inflation expectation for next year to 1.5% from 1.8% in December 2018.

Author:, Economist

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Germany Inflation Chart

Germany Inflation June 2019 0

Note: Month-on-month and year-on-year changes of harmonized index of consumer prices %.
Source: Federal Statistics Office (Destatis) and FocusEconomics calculations.

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