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Germany’s May inflation rises 2.8% on higher services prices
Global Banking & Finance Review®
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By Maria Martinez
BERLIN (Reuters) -German inflation rose in May due to higher services prices, the federal statistics office said on Wednesday, confirming preliminary data.
German consumer prices, harmonised to compare with other European Union countries, rose 2.8% in May from a year earlier. They had risen 2.4% year-on-year in April.
“The inflation rate is slightly up again, mainly due to the continued increase in service prices,” said Ruth Brand, president of the statistics office.
Prices of services were 3.9% higher in May than in the same month a year earlier, following an increase of 3.4% in the previous month.
This was a marked acceleration in the year-on-year price increase, which can be partly attributed to the end of a base effect after a national cheap rail travel scheme was introduced in May 2023.
“By contrast, energy and food prices have had a dampening effect on overall inflation since the beginning of the year,” Brand said.
Energy product prices fell by 1.1%, compared with May 2023 and food prices were up 0.6%, with the inflation rate for food significantly below the overall inflation rate.
Core inflation, which excludes volatile food and energy prices, was at 3.0% in May, unchanged from April.
The European Central Bank keeps a close eye on core inflation. The bank went ahead with its first interest rate cut since 2019 last week, citing progress in tackling inflation even as it acknowledged the fight was far from over.
(Reporting by Andrey Sychev and Maria Martinez, editing by Rachel More and Rashmi Aich)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured annually.
Consumer prices refer to the prices paid by consumers for goods and services, which are used to calculate inflation rates.
Core inflation measures the long-term trend in prices by excluding volatile items such as food and energy. It provides a clearer view of inflation trends.
The European Central Bank (ECB) is the central bank for the euro, responsible for monetary policy within the Eurozone to maintain price stability.
Service prices refer to the costs associated with services provided to consumers, which can influence overall inflation rates.
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