Germany: Inflation falls to 17-month low
May 29, 2012
In May, consumer prices dropped 0.2% over the previous month, according to a preliminary flash estimate released by the Federal Statistics Institute (Destatis) on 29 May. The monthly decline contrasted the revised 0.2% increase recorded in April (previously reported: +0.1% month-on-month). As a result of the monthly drop, annual headline inflation fell from 2.1% in April to 1.9% in May, which represents the lowest level seen since December 2010 and was in line with market expectations. According to the Institute, annual inflation dropped in May, as prices for energy, particularly for fuels, fell over the same month last year. Meanwhile, annual HICP inflation (based on the harmonized index of consumer prices) also declined from 2.2% in April to 2.1% in May. A more detailed inflation data set will be published on 13 June. The Bundesbank expects inflation to continue moderating in the coming months and to average 1.8% this year, before declining further to 1.5% in 2013.
Author: Ricardo Aceves, Senior Economist