Germany’s inflation rate, measured as the year-on-year change in the consumer price index, is expected to go down to 2.3% in June 2021 from a ten-year high of 2.5% in May.
Still, the inflation rate in Europe’s biggest economy remains above the European Central Bank’s target of 2%.
Consumer prices are also expected to rise by 0.4% in June compared to May, according to estimates published by the Federal Statistical Office (Destatis) on 29 June.
Energy continues to fuel inflation
The annual increase in the prices of consumer goods is expected to stay unchanged compared to May at 3.1%, mainly due to a 9.4% estimated increase in energy prices. Meanwhile, the increase in food prices has moderated to 1.2%, from 1.5% in May and 1.9% in April.
The yearly increase in service prices has also slowed down from 2.2% in May to 1.6% in June, according to Destatis.
Low base effect
The increase in Germany’s inflation rate in the first five months of this year was mainly due to the low base effect.
In 2020, Germany recorded an average annual inflation rate of 0.5%, the lowest level since 2009, after the Federal Government cut the VAT rate in June 2020 to support the short-term economic recovery.