German Inflation Rate Confirmed At 6-Month Low In May


German consumer prices rose 1.5 percent year-on-year in May of 2017, easing from a 2.0 percent rise in April and matching preliminary estimates. It was the lowest inflation rate since November 2016, as cost of energy and services increased at a slower pace.

Year-on-year, cost of goods as a whole rose 1.8 percent, following a 2.2 percent gain in the prior month, as cost of energy went up much less than in a month earlier while cost of food rose further. 

Energy prices as a whole increased by 2.0 percent in May, much slower than a 5.1 percent rise in April. Prices went up for heating oil (11.7 percent), followed by motor fuels (4.4 percent) and electricity (1.2 percent). In contrast, cost fell for gas (-3.4 percent).  

Excluding the prices of all types of energy, the inflation rate would have been 1.4 percent in May;  excluding the prices of mineral oil products, it would have been 1.3 percent.

Prices of food and non-alcoholic beverages rose 2.3 percent, after a 1.7 percent rise in a month earlier. Prices increased markedly for: edible fats and oils (19.5 percent), fish and fish products (4.0 percent), fruits (1.2 percent), meat and meat products (1.4 percent) and dairy products (10.5 percent). 

Cost of services went up 1.2 percent in May, following a 1.7 percent gain in the prior month. Prices rose mainly for: net rents exclusive of heating expenses (1.8 percent); catering services (1.9 percent), maintenance and repair of vehicles (3.3 percent). In contrast, cost fell for services of social facilities (−6.8 percent) and package holidays (-2.4 percent).

On a monthly basis, consumer prices fell 0.2 percent, compared to a flat reading in the prior month. Prices of energy declined by 1.4 percent, due to  heating oil (–6.5 percent) and motor fuels (–2.6 percent, including supergrade petrol: –2.3 percent, diesel fuel: –3.0 percent). Slight price decreases were also observed for clothing (–0.6 percent) and footwear (–0.4 percent). Food prices remained unchanged on the previous month. Considerable price decreases were observed especially for vegetables (–4.6 percent, including tomatoes: –19.8 percent; cucumbers: –14.2 percent; butterhead lettuce or iceberg salad: –12.4 percent), whereas price rises were recorded, for example, for edible fats and oils (+2.2 percent, including butter: +4.4 percent) and dairy products (+1.1 percent; including UHT milk: +2.5 percent; cream: +2.7 percent).  

The harmonised index of consumer prices rose 1.4 percent from the previous year, faster than a 2.0 percent rise in the previous month and in line with estimates. Compared to a month earlier, the index declined by 0.2 percent.

Destatis | Rida Husna | rida@tradingeconomics.com
6/14/2017 1:27:41 PM