German Inflation Accelerated for a Second Month in JuneStefan Riecher and Jeff Black
German inflation accelerated more than forecast in June, climbing for a second month after falling to the lowest level since 2010 in April.
The consumer price index in Europe’s largest economy, calculated using a harmonized European Union method, rose 1.9 percent from a year ago, compared with 1.6 percent in May. Economists forecast an inflation rate of 1.8 percent, according to the median of 24 estimates in a Bloomberg News survey. Prices climbed 0.1 percent on the month.
“Overall price developments in Germany are moderate,” said Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn. “With the second rise in a row the downward trend in the inflation rate has finally come to an end, and it should in the coming months stabilize under 2 percent.”
The Bundesbank forecasts German inflation will average 1.6 percent this year and 1.5 percent in 2014.
Inflation in the euro area accelerated to 1.4 percent in May from 1.2 percent the previous month, the EU’s statistics office in Luxembourg said June 14. Data for June will be published on July 2. The European Central Bank this month cut its 2013 inflation forecast for the region to 1.4 percent from 1.6 percent and left the 2014 estimate unchanged at 1.3 percent.
The ECB on June 6 kept its benchmark interest rate unchanged at a record low of 0.5 percent as the 17-member currency bloc tries to emerge from six quarters of contraction, its longest-ever recession. The Bundesbank on June 7 reduced its 2013 growth projection for Germany to 0.3 percent from the 0.4 percent predicted in December, citing a worse-than-expected first quarter and warning that the still-unsolved sovereign debt crisis poses risks to the recovery.
ECB policy makers including President Mario Draghi said this week that an end to the accommodative monetary stance is distant and that the Frankfurt-based central bank stands ready to act if economic conditions worsen.
“A slight increase in the inflation rate is no reason for concern at the moment,” said Jens Kramer, an economist at NordLB in Hanover. “It is still under 2 percent and we are convinced it will stay there for the months to come.”