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German inflation unexpectedly cools off in June at 8.2%

Published 06/29/2022, 09:03 AM
Updated 06/29/2022, 09:08 AM
© Reuters. FILE PHOTO: A man carries bags on Hohe Strasse shopping street as the spread of the coronavirus disease (COVID-19) continues in Cologne, Germany, December 1, 2021. REUTERS/Thilo Schmuelgen

BERLIN (Reuters) -German inflation dipped in June, the first month that the effects of government measures to dampen high fuel prices were included, data showed on Wednesday.

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries (HICP), increased by 8.2% on the year, less than May's rise of 8.7%, the federal statistics office said.

A Reuters poll of analysts had pointed to an overall annual German HICP reading of 8.8% in June.

Energy prices were 38% higher in June than in the same month a year earlier, a similar change to previous months, driven up by the war in Ukraine and ongoing supply bottlenecks.

In a bid to counter rising energy prices, the German government has cut fuel tax and introduced a ticket allowing travel across the country for 9 euros a month.

The statistics office said the effects of those measures were included in the results but their exact impact was not yet clear.

Analysts connected the government measures to the unexpected easing in June inflation but warned that their effects would evaporate in September, when they are due to run out.

"It is a small relief for consumers that June did not bring any further loss of purchasing power compared to the previous month," said Michael Heise, chief economist at HQ Trust.

© Reuters. FILE PHOTO: A man carries bags on Hohe Strasse shopping street as the spread of the coronavirus disease (COVID-19) continues in Cologne, Germany, December 1, 2021. REUTERS/Thilo Schmuelgen

"However, this is likely to be a respite rather than a turning point in inflation."

Jens-Oliver Niklasch of LBBW bank predicted July and August would bring similar inflation rates, while September would see a jump.

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