German June inflation stays subdued: statistics

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German consumer prices rose slightly by 0.9 percent in June from the figure for June 2009, the national statistics office said on Monday, owing mainly to decreased energy costs.

In May, inflation in Europe's biggest economy stood at 1.2 percent, the Destatis office said, suggesting that inflationary pressures could be easing.

"As in the previous months, the year-on-year rate of price increase is mainly determined by the sharp price rises for heating oil and motor fuels," a statement said, citing preliminary data.

On a monthly basis, consumer prices increased by 0.1 percent.

Commerzbank economist Simon Junker forecast that energy prices "will no doubt rise quite substantially over the remainder of the year, mainly on account of the weak euro."

But because headline inflation, which is obtained when volatile components like energy are stripped out, should remain low in the coming months, "we do not share concerns about either inflation or deflation," he said.

"Over the year on average, Germany's inflation rate should amount to around one percent, and only slightly more next year at just short of 1.5 percent," Junker added.

© 2010 AFP

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