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German inflation nudges back up in June

Published on June 29, 2020

Inflation in Germany regained ground in June after falling steeply through months of lockdown for Europe’s top economy, as intense talks over EU-wide economic stimulus loom.

Price growth rebounded to 0.9 percent year-on-year this month, statistics authority Destatis said in preliminary figures, beating analyst expectations.

The measure had fallen from 1.7 percent in February — before the coronavirus struck — to 0.6 percent last month.

Goods inflation picked back up into positive territory again in June after plummeting in March and April, in part due to a global oil glut sapping energy prices.

Meanwhile price growth for food and services including rent remained relatively steady.

Inflation reached 0.8 percent using the European Central Bank’s preferred yardstick known as the Harmonised Index of Consumer Prices (HICP), after 0.5 percent in May.

Frankfurt policymakers agreed earlier this month to massively boost support to the 19-nation eurozone, sketching a total of 1.35 trillion euros ($1.5 trillion) of emergency bond-buying until June 2021 under a scheme first launched in March.

Banks also borrowed over 1.3 trillion euros earlier this month on ultra-favourable terms designed to keep credit flowing to the real economy.

Both programmes have the ultimate aim of stoking inflation towards the ECB’s two-percent goal.

On the fiscal side, Chancellor Angela Merkel will meet French President Emmanuel Macron outside Berlin later Monday for talks ahead of Germany’s assuming the rotating EU presidency.

A key focus will be how to coax sceptical capitals onside for a 750-billion-euro stimulus programme Brussels hopes to agree next month.