Key facts
- German inflation was confirmed at 2.4% year-on-year in June.
- This is a decrease from 2.7% in May.
- The drop in inflation was largely due to a slowdown in energy price increases.
- Core inflation, excluding volatile food and energy prices, held steady at 2.5%.
German inflation was confirmed at 2.4% year-on-year in June, a decrease from 2.7% in May, according to final data released by the federal statistics office. The slowdown was primarily attributed to a significant drop in energy inflation, which fell to 3.4% from 6.6% in the previous month, partly due to government tax cuts on fuel. Core inflation, which excludes volatile food and energy prices, remained stable at 2.5%, and services inflation also held steady at 3.1%.
Economists had anticipated a slightly higher inflation rate of 2.5% for June. The easing inflation figures, alongside a reported slowdown in French inflation, suggest that the broader euro zone inflation reading for June, due to be released soon, may also be lower than previously expected. This data comes ahead of the European Central Bank's upcoming policy meeting, with analysts largely expecting the bank to hold interest rates steady in July, unless oil prices experience a sharp rebound.
Ralph Solveen, senior economist at Commerzbank, noted that current data shows little evidence of indirect price effects from the surge in energy costs spreading to other goods. However, economists anticipate German inflation may rise in July as the government's fuel tax cut measure expires.