Germany: Harmonized inflation increases in May
Harmonized inflation rose to 2.8% in May from April’s 2.4%. The reading outpaced both the Euro area average of 2.6% and market expectations. Looking at the details of the release, the increase chiefly reflected faster price growth for transportation due to a fading high base of comparison after a more affordable rail travel scheme was introduced in May 2023. That said, price pressures for hospitality eased.
Annual average harmonized inflation fell to 3.8% in May (April: 4.1%). Meanwhile, consumer price inflation rose to 2.4% in May from 2.2% in April.
Lastly, harmonized consumer prices increased 0.23% from the previous month in May, which was below the 0.63% increase logged in April. May’s result marked the weakest reading since January.
Price pressures will recede on average from current levels by end-2024 and more than halve from 2023 levels in 2024 as a whole. Past monetary policy tightening and still-muted economic activity will keep price pressures in check.