Carsten Brzeski, chief economist at ING, notes that based on the results of several regional states, German headline inflation came in at 1.3% year-on-year in June, unchanged from May, and the joint lowest since April last year.
Key Quotes
“The national inflation measure increased to 1.6% YoY, from 1.4% in April.”
“The main inflation drivers were higher food prices and higher leisure costs. Communication and energy were actually drags on inflation.”
“Where available, regional state proxies suggest that core inflation in Germany has remained broadly stable. In May, it stood at 0.9% YoY.”
“If Germany was the entire eurozone, this week’s data of weakening economic sentiment and stable but low inflation would have strengthened the European Central Bank’s case for additional easing. Whether it would actually help an economy where loans to the corporate sector are currently growing by more than 7% YoY, is a different issue.”
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