Germany’s inflation rate rose sharply in June to 1.6% year-on-year after 1.4% in May, coming close to the “close to 2%” target of BCE, according to the final figures released on Thursday by Destatis (Federal Statistical Office of Germany).
In detail, energy prices climbed 2.5%, up from 4.2% in May, while food prices climbed 1.2%, compared to 0.9% the month before.
The statistical institute notes that the sharp rebound (+ 6.1%) in the price of tour packages, after a drop of 9.0% in May, supported the index because of a calendar effect, Pentecost being later than last year.
The harmonized consumer price index (CPI), used as a benchmark by the European Central Bank (ECB), is up 1.5% year-on-year, compared to 1.3% in the mid-year interim assessment -June, but remains below the level considered by the monetary institute as a sign of good health of the economy.
We do not expect the trend to improve due to sluggish industrial conditions and an unfavorable base effect, as the August-October 2018 surge in energy prices should not be repeated this year.
The ECB has prepared the minds for further monetary easing, which could take the form of a drop in one of its rates or the second program of asset purchases.
Already twice in June, the president of the Mario Draghi institute raised expectations in this direction, explaining that his institution could trigger a panoply of measures “in the absence of improvement” on the inflation front.
Karen Stone is a reporter for The Ticker Times. After graduating from DNYU Stern School of Business, Karen got an internship at New York 4 where she worked on profiling local businesses. Karen was also was a columnist for the Huff Post. Karen mostly covers business and community events.
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