German inflation is driven by butter and fruits

German consumer price index (CPI rose 0.1% over the month in June while increasing 2.1% over the year, confirming the preliminary estimate of German statistical office Destatis.

Energy prices were the main inflation driver increasing 6.4% over the year in June compared to 5.1% y/y in May. In particular, heating oil prices jumped up by 30.3% over the year in June, partly affected by lower comparison base one year ago. German inflation adjusted for energy prices thus rose 1.6% over the year in June.

Food prices also rose above the average increasing 3.4% over the year in June, with food prices rising more than 3% for the third month in a row.  Among the food prices, edible fats and oils increased 14.4%, including butter that itself rose 26.1% over the year in June. Germans paid markedly more also for fruit that increased 7.2% y/y and dairy products and eggs rising 4.8% y/y. Excluding food and energy prices, the core inflation rate rose1.4% over the year in June 2018.

The prices of goods increased by 2.8% y/y in June 2018 driven by energy and food prices, while services increased 1.8% y/y.

The harmonized index of consumer prices (HICP) for Germany, which is calculated for European purposes, rose 2.1% over the year in June,  exceeded again the two-percent threshold, which is the official inflation target of the European Central Bank (May 2018: +2.2%). Compared with May this year, the HICP increased by 0.1% in June also confirming the preliminary estimate.