German CPI reaccelerates in June, as expected

By Alexander Bueso

Date: Thursday 29 Jun 2023

(Sharecast News) - The cost of living in the euro area's largest economy picked up as expected in June.
According to a preliminary estimate from Destatis, in seasonally adjusted terms, the harmonised German Consumer Price Index rose by 0.4% on the month and 6.8% year-on-year.

In May, the headline harmonised CPI had risen by 6.3%.

Core CPI meanwhile was pegged at 5.8% for June (Pantheon Macroeconomics: 5.7%).

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, attributed the lion's share of the acceleration in CPI to the negative base effects as 2022's temporarily-reduced rail fares dropped out of the calculation.

"Looking ahead, we see a decline in headline inflation over the summer, as energy and food inflation soften," Vistesen told clients.

"Core inflation, meanwhile, will remain elevated due to base effects in transport until August. We then look for a big drop in September as underlying disinflation in goods and services hit the data more meaningfully, in line with the survey data."

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