Germany: Inflation moderates in May
May 27, 2011
In May, consumer prices remained unchanged over the previous month, according to a preliminary flash estimate released on 27 May by the National Statistics Institute. The monthly reading was below both the 0.2% increase observed in April and market expectations of a 0.1% rise. As a result of the subdued reading, annual inflation edged down from 2.4% in April to 2.3% in May, which marked a moderation after inflation had reached its highest level since October 2008. The annual consumer price moderation reflected decreasing prices for oil, after reaching their highest level in more than two years. Moreover, in May HICP inflation (based on the harmonized index of consumer prices) fell to 2.4% from 2.7% in April. Complete and more detailed inflation data will be published on 10 June. The government expects headline inflation to average 2.4% this year, before falling to 2.0% in 2012. Meanwhile, the Bundesbank anticipates inflation to average 1.7% this year and 1.6% in 2012.
Author: Ricardo Aceves, Senior Economist