German headline inflation eases in June, core stabilises
Overview of German Inflation Trends in June
By Maria Martinez
Headline Inflation Slows Amid Lower Energy Prices
BERLIN, June 30 (Reuters) - German inflation slowed in June on lower energy prices while core inflation stabilised, easing concerns that price pressures from the Iran war could spread more widely through the economy.
Inflation eased to 2.4% from 2.7% in May, preliminary data from the national statistics office showed on Tuesday.
Analysts polled by Reuters had expected the EU-harmonised consumer price index to rise 2.5%.
Energy Prices and Government Measures
The decline was driven by a slowdown in energy inflation to 3.4% in June from 6.6% in May, reflecting a cut in fuel taxes introduced by the government to cushion war-related price increases.
Economists expect Germany's inflation rate to rise in July after the measure expires.
Expert Commentary on Inflation Effects
"The available figures so far show virtually no evidence of indirect effects from the at times massive increases in energy prices on the prices of other goods," said Ralph Solveen, senior economist at Commerzbank.
Core and Services Inflation Remain Stable
Core inflation, which excludes volatile food and energy prices, was unchanged at 2.5%.
Services inflation also held steady at 3.1%.
Implications for the Euro Zone and ECB Policy
The German data comes ahead of Wednesday's euro zone inflation release. Economists polled by Reuters expect inflation in the bloc to ease to 3.0% in June from 3.2% in May.
The European Central Bank raised interest rates for the first time in nearly three years in June, seeking to contain inflation before higher energy costs spread more broadly through the euro zone economy.
Euro Zone Outlook and Market Expectations
The German figures, together with a slowdown in French inflation reported earlier on Tuesday, point to a softer euro zone inflation reading for June, said Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.
"It makes an ECB hold in July all but certain, unless oil prices stage a spectacular rebound before the meeting," Vistesen said.
(Reporting by Maria Martinez and Linda Pasquini. Editing by Friederike Heine and Mark Potter)
