German consumer inflation picks up in June, remains weak on month

Germany’s consumer price index-led inflation picked up pace in June, suggesting a gradual pick up in Eurozone’s largest economy. However, prices remained weak on a monthly basis, despite efforts by the European Central Bank to retain a loose monetary policy.

Consumer prices rose 0.3 percent from last year, in line with expectations, following a 0.1 percent increase in May. Prices have increased for the second straight month. A similar pace of increase was last seen in March. The consumer price index edged up 0.1 percent m/m, slightly slower than a 0.2 percent rise forecast by economists, preliminary estimate from Destatis showed Wednesday.

The harmonized index of consumer prices, which is calculated for European purposes, climbed 0.2 percent year on year in June and by 0.1 percent on a monthly basis. Economists had forecast a 0.1 percent annual increase and a 0.2 percent monthly rise. The statistical office is set to release the final results on July 12.

Consumer prices rose by 0.6 percent on the year in Bavaria, by 0.4 percent in North Rhine-Westphalia and by 0.4 percent in Saxony. They rose by 0.2 percent in Baden-Wuerttemberg, were unchanged in Hesse and fell by 0.1 percent in Brandenburg.

"Looking ahead, German headline inflation should continue to rise as the drag from the energy component eases," said Jennifer McKeown, Analyst, Capital Economics.