Germany – Core inflation falls slowly

The German inflation rate fell to the ECB's target of 2% in June, slightly lower than in the previous month (2.1%). Apart from minor fluctuations, it has remained virtually unchanged for more than a year. The same applies to the core rate, which excludes the often highly volatile prices for energy and food. Although it has fallen slightly in recent months, at 2.7% (after 2.8% in May) it was only marginally lower than a year ago.

Both subgroups fell slightly for the core rate. The slight downward trend in the inflation rate for services continued. In June, these were still 3.3% higher than a year ago (May: 3.4%), whereas at the end of last year the rate was just over 4%. As a result, labor costs have not risen quite as sharply recently in these labor-intensive sectors. In addition, companies are clearly finding it increasingly difficult to pass these costs on to their customers in view of the continuing weak economy.

For full text see attached PDF-Version.