Germany: Fall in inflation in June

EcoFlash

CPI, down by 0.2 point in June (to 1.7%), reached its lowest level since December 2010. The harmonised inflation (HICP) also eased (to 2%). According to regional data, inflation particularly fell in energy sector. Over the month, consumer prices fell by 0.1% m/m in line notably with a decrease of prices in the leisure, clothing and in energy sectors.

According to the first estimate, CPI, down by 0.2 point in June (to 1.7%), reached its lowest level since December 2010. The harmonised inflation (HICP) also eased (to 2 %, after 2.2% in May).

According to regional data, used to estimate the preliminary CPI, inflation rose in foods and clothing sectors but fell in energy sector. Moreover the fall in prices in education sector (-20.9% y/y) in Baden Württemberg has still a downward pressure on total inflation.

Over the month, consumer prices fell by 0.1% m/m after falling by 0.2% m/m the previous month. Regional data suggest that prices increased in the food and particularly in seasonal food sector, and fell in leisure, clothing and in energy sectors.

Inflation is expected to change little in the coming months. The rise in earnings, which may increase in 2012 at a faster pace than last year (+3.4% in nominal terms in 2011) in line with the low level of unemployment rate (6.7% in May), should underpin private consumption and core inflation in the coming months, particularly in services sector. But according to surveys, tensions on the prices of certain inputs ease in line with sluggish global economic conditions, especially in the manufacturing sector. The output prices component of the composite PMI thus reached in June its lowest level since August 2010 (to 50.4, after 53.3 in May) in line with a fall of the input prices component (to 51.6, after 55 in May).

Published On Wed, Jun 27 2012, 13:07 GMT Previous entries

Catherine Stephan

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Expert in Germany, Austria, Switzerland and Eu Enlargement.

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