According to the first estimate, German CPI inflation slowed more than expected in June. The annual rate of inflation eased from 2.2% Y/Y to 2.0% Y/Y, while the consensus was looking for a more moderate slowdown, to 2.1% Y/Y.
Regional details show that prices of clothing & footwear, household energy, transportation and leisure & entertainment dropped in June, which was only partly offset by higher prices for food & beverages and household goods.
German inflation is now again at 2%, much earlier than most had expected, helped by a sharply lower oil price.
The German rate of inflation matches now exactly the ECB’s target, for the first time since early 2011, giving the ECB more room to cut rates and support the economy.