Inflation falls to 2.2 percent in June

Inflation in Germany is falling noticeably. In June, consumer prices were 2.2 percent higher than in the same month last year - after 2.4 percent in May, according to the Federal Statistical Office in Wiesbaden. Economists expect the trend towards stable prices to continue in the summer. They expect rates of less than two percent.

Economist Sebastian Dullien from the Institute for Macroeconomics and Economic Research (IMK), which is close to the trade unions, called the increase in May an outlier. "The downward trend in inflation is intact and has now reasserted itself in June." According to economist Ulrike Kastens from the investment company DWS, the European Football Championship only had a very minor impact on inflation, for example with rising prices for hotel accommodation. While services in particular rose sharply in June according to the statisticians, energy became 2.1 percent cheaper within a year. Food prices rose only moderately (plus 1.1 percent) following substantial price increases. The inflation rate excluding the volatile prices for food and energy - core inflation - was therefore 2.9%. This was slightly less than in the previous month of May.

Further slowdown in inflation

According to a recent survey of companies on their price plans, the Munich-based Ifo Institute expects inflation to continue to fall. The inflation rate is likely to continue its slow decline and "fall below the two percent mark in August for the first time since March 2021", says Ifo economic analyst Timo Wollmershäuser.

Deutsche Bank comes to a similar conclusion in view of falling energy prices and a "calming of food inflation". However, core inflation remains quite high at 2.9 percent, writes economist Sebastian Becker. The extremely high inflation rates of the past two years are now history. On average for the year, leading economic research institutes expect inflation in Germany to slow significantly to 2.3 percent - down from 5.9 percent in 2023. However, the decline has been sluggish of late. In May, inflation picked up again for the first time this year - mainly due to more expensive services.

The decline in inflation had already stalled in April at a rate of 2.2%. Economists pointed to higher wages, which can lead to price increases by companies. Consumers are also still feeling the effects of sharply higher prices when shopping. According to a special analysis by the Federal Statistical Office for the period from January 2020 to May 2024, food prices have risen by more than 30 percent on average in recent years. The analysis was made available to Wirtschaftswoche.