Germany: Inflation falls to 18-month low
June 27, 2012
In June, consumer prices fell 0.1% over the previous month, according to a preliminary flash estimate released by the Federal Statistics Institute (Destatis) on 27 June. The monthly reading followed the 0.2% drop observed in May and was in line with market expectations.
As a result of the monthly drop, annual headline inflation fell from 1.9% in May to 1.7% in June, which represents the lowest level since December 2010. According to the statistical institute, annual inflation declined in June, as prices for energy, especially for fuels, dropped over the same month last year.
Meanwhile, HICP inflation (based on the harmonized index of consumer prices) followed suit and fell from 2.2% in May to 2.0% in June. More detailed inflation data will be published on 11July.
In its June economic outlook, The Bundesbank revised its inflation and now expects it to average 2.1% this year, up from its previous 1.8% estimate. For 2013, the Bank foresees inflation averaging 1.6%, slightly up its previous 1.5% forecast.
Author: Ricardo Aceves, Senior Economist