German inflation edges up in June

Consumer prices increased by 1.6 percent year-on-year last month, Destatis reported in preliminary data.

German inflation edges up in June

World Bulletin / News Desk

Inflation picked up slightly in Germany, Europe's largest economy, in June, preliminary figures from federal statistics office Destatis showed Thursday, but remained short of the European Central Bank's eurozone-wide target.

That was slightly faster than in May and also beat the consensus forecast of 1.4 percent of economists surveyed by Factset.

Inflation as measured by the Harmonised Index of Consumer Prices -- the ECB's preferred yardstick -- stood at 1.5 percent, also a slight pickup on the pace in May.

A breakdown of the different components of the consumer price basket showed that the pace of inflation for goods slowed slightly, while energy prices did not rise at all.

Prices for food and services grew more quickly than in May, while domestic rents rose at a steady rate.

"The health of the German labour market and economic activity more generally could see core inflation [excluding volatile food and energy prices] rise further in the months ahead," Capital Economics analyst Jennifer McKeown commented.

"However, the bank wants to see inflation rising throughout the eurozone, not just in Germany. And there is so far very little sign of that," she added, pointing to falling inflation in Spain this month.

The ECB has said that a sustained pick-up in underlying inflation across all 19 euro area nations is a condition for ending its mass bond-buying programme and historic low interest rates.

Both measures are designed to encourage lending, promoting growth and driving inflation towards the bank's target of just below 2.0 percent.

For now, the ECB is seeing improving economic growth and employment figures without any corresponding increase in inflation, pointed out ING DiBa analyst, Carsten Brzeski.

"All of this means the ECB will strike a very cautious balance between moving towards tapering [winding down its stimulus programmes] without jumping the gun and distorting markets," he predicted.

 

Güncelleme Tarihi: 29 Haziran 2017, 16:23
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