prices - Statistician: Energy and food dampen inflation
Stable Prices for Energy and Foodstuffs have also dampened inflation in Germany during June, according to provisional data from the Federal Statistical Office (Destatis). Consumer prices in June were 2.2% above the level of the previous year's month, following a 2.4% increase in May.
However, above-average price increases are still observed in services. "The current core inflation, which excludes energy and food, is 2.9% and is below the 3% mark for the first time since February 2022," explained Destatis President Ruth Brand. Compared to the previous month of May, prices overall rose by 0.1%.
Services, such as insurance (+12.3%), catering (+6.8%), and automotive repair shops (+6.2%), experienced particularly high price increases. Net rents decreased by 2.2%.
If inflation in Germany and the Eurozone as a whole continues to decline, the European Central Bank (ECB) could have room for further interest rate cuts in the course of the year. The ECB lowered its benchmark interest rates by 0.25 percentage points for the first time since the inflation wave in the currency union in June. The ECB aims to maintain price stability around the rate of two percent price increases.
The trend towards stable prices should continue in the summer
According to economists' estimates, the trend towards stable prices should continue in the summer: They expect rates below two percent soon. While services significantly increased in price in June, energy became 2.1% cheaper within a year. Foodstuffs showed only moderate increases (plus 1.1%).
Long-term, the now dampening groups are significantly more expensive than the overall shopping basket, which is used as a model for the representation of price development. Therefore, energy is currently more than 47% more expensive than in 2020. Foodstuffs have increased by 33% since then, while the overall consumer price index has risen by only 19.4%.
Destatis Statement
The EZB, or European Central Bank, might consider additional interest rate reductions due to the decreasing inflation in Germany and the Eurozone, as mentioned by Destatis President Ruth Brand. Inflation in June saw a 2.2% increase compared to the same period last year, with foodstuffs contributing positively to this stabilization, as reported by the Statistical Office of the Federative Republic of Germany (Destatis) based in Wiesbaden, Germany. Consumers, in particular, have benefited from the relatively lower prices of food items. Despite this, services, including insurance, catering, and automotive repair shops, have experienced substantial price increases, pushing the core inflation rate, excluding energy and food, to 2.9%.
