German Inflation Softens In June

(RTTNews) - Germany's inflation eased for the second straight month in June as the pace of increase in energy prices slowed, flash data from Destatis showed Tuesday.

Consumer price inflation dropped to a four-month low of 2.3 percent in June from May's 2.6 percent. Economists had forecast annual inflation to remain unchanged at 2.6 percent.

Similarly, the EU harmonized inflation weakened to 2.4 percent from 2.7 percent a month ago. The HICP rate was expected to ease marginally to 2.6 percent.

Meanwhile, core inflation that excludes prices of food and energy held steady at 2.5 percent in June.

Energy prices logged an annual growth of 3.4 percent in June, which was slower than the 6.6 percent increase seen in May. At the same time, food prices moved up 0.4 percent, the same as in the prior month.

Services inflation was stable at 3.1 percent, while the rate of increase in prices of goods eased to 1.7 percent from 2.2 percent.

On a monthly basis, consumer prices dropped 0.3 percent in June, while they were expected to remain flat. The HICP slid 0.2 percent, confounding expectations for an increase of 0.1 percent.

ING economist Carsten Brzeski said today's inflation numbers provide very little evidence of any knock-on or indirect effects from higher energy prices on the rest of the economy.

Inflation is likely to accelerate again next month as today marks the last day of the government's tax rebate on fuel, the economist added.

Brzeski forecast headline inflation to rise to around 3.5 percent in the second half of the year, before falling below 2 percent in 2027.

Earlier, data from Destatis showed that import prices grew at the fastest pace since December 2022. Import prices registered an annual growth of 6.8 percent in May after rising 5.3 percent in April. Compared to April, import prices climbed 0.7 percent in May.