At a high level, consumer prices in Germany are only rising moderately. This is due to product groups that have become particularly expensive in the past.
Stable prices for energy and food also dampened inflation in Germany in June. The Federal Statistical Office confirmed preliminary data according to which consumer prices in June were 2.2 percent above the level of the same month last year – after 2.4 percent in May.
Above-average price increases, however, are still being observed in services, explains Destatis President Ruth Brand. Excluding energy and food, so-called core inflation is currently 2.9 percent, which is below the 3 percent mark for the first time since February 2022. Compared to the previous month of May, prices rose by a total of 0.1 percent in June.
The fact that prices for services are 3.9 percent higher than a year ago is due, among other things, to insurance (+12.3 percent), catering (+6.8 percent) and car repair shops (+6.2 percent). Net rents increased by 2.2 percent.
If inflation falls in Germany and in the eurozone as a whole, this will give the European Central Bank (ECB) scope for further interest rate cuts over the course of the year. In June, it cut interest rates by 0.25 percentage points for the first time since the wave of inflation in the currency area. The ECB believes that the desired price stability will be maintained at around a two percent price increase.
Trend towards stable prices is likely to continue in summer
Economists believe that the trend towards stable prices will continue in the summer: they expect rates to fall below two percent soon. While services in particular rose sharply in June, energy prices fell by 2.1 percent year-on-year. After sharp price increases, food prices only saw moderate increases (plus 1.1 percent).
In the long term, however, the groups that are now having a dampening effect have become significantly more expensive than the entire basket of goods that is put together as a model to illustrate price developments. Accordingly, energy is currently more than 47 percent more expensive than in 2020. Food prices have increased by 33 percent since then, while the overall consumer price index has only increased by 19.4 percent.
Communication from Destatis
Source: Stern
