Falling fuel prices drive inflation lower in Germany

For the month ending today, inflation stood at 2.3%, higher compared to the same month last year, while in May it was 2.6%.

The main factor contributing to the moderation of inflation is estimated to be the decline in fuel prices, as well as the 17-cent-per-litre tax reduction on petroleum products introduced by the government. The cost of goods and services rose by 2.3% compared with June of the previous year, while it increased by 2.9% in April and 2.6% in May.

“The easing of tensions in the crisis with Iran has brought global oil prices back to pre-crisis levels, and this development is also reflected in German inflation data,” commented Berenberg Bank economist Felix Schmidt to ARD.

According to the Bundesbank, the government’s intervention in fuel prices reduced inflation by approximately 0.25 percentage points. However, the measure expires tomorrow, and the government has ruled out any extension.