Germany: Inflation sinks slightly to 7.6%

As a result of gas discounts, drastically reduced prices for public transportation and a slightly lower oil price than in the preceding months, Germany managed to lower inflation somewhat in June.

The Federal Statistical Office, or Destatis, announced on Wednesday that the average price of goods and services was 7.6% higher than a year earlier, compared with 7.9% in May. Economists had forecast an 8% inflation rate for June, before the new measures meant to help consumers had kicked in.

Price differences varied greatly across sectors. Energy prices, for example, were at a 38% increase, down from 38.3% in May. Inflation for services was at 2.1%, which had been 2.9% the previous month.

Inflation for groceries, however, increased from 11.1% in May to 12.7% in June.

High inflation likely until January

DekaBank chief economist Ulrich Kater told the Reuters news agency that he did not see any sustained price easing in the near future. Kater said that "we have to reckon with inflation rates around 7% through the end of the year in Germany."

The economist said that, if no further crises crop up, inflation would likely ease in January. He added that perceived inflation was at an all-time high, with a survey of Germans estimating the rate to be 18%.

Consumer prices in Germany have been on an almost constant climb for 18 months, with the last fall in the rate registered in January.

Inflation was first stoked by the disruptions arising from the coronavirus pandemic, and then by the war in Ukraine. Russia's invasion has caused "prices for energy to climb markedly," Destatis said. 

It added that the disruption caused to supply chains by the war and the pandemic also added to price pressures.

es/sms (AFP, Reuters)