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German Inflation Falls More Than Expected

Good news for households and companies under pressure from interest rates. The inflation pressure in Europe's largest economy, Germany, fell slightly more than expected in June, according to preliminary figures. The same trend has also been reported earlier from France and Spain.

» Updated: July 16 2024

» Published: July 01 2024

German Inflation Falls More Than Expected
Photo: Ebrahim Noroozi AP/TT

Good news for households and companies under pressure from interest rates. The inflation pressure in Europe's largest economy, Germany, fell more than expected in June, according to preliminary figures. The same trend has also been reported from France and Spain.

German inflation fell to 2.2 percent in June, according to preliminary figures from the German Federal Statistical Office Destatis. This can be compared with 2.4 percent in May and an average forecast among analysts of 2.3 percent, according to Bloomberg.

Compared to the previous month, consumer prices in Germany rose by 0.1 percent, against expected 0.2 percent.

Also down in France

According to the EU-harmonized measure, inflation in Germany fell to 2.5 percent in June, from 2.8 percent in May and an average forecast for June of 2.5 percent.

Last week, preliminary inflation figures for June were released from other major euro countries, including France. The French inflation rate also fell more than expected in June, to 2.1 percent, from 2.3 percent in May.

On Tuesday this week, Eurostat will summarize the inflation rate for the entire eurozone in a preliminary report.

Swedish inflation figures for June from Statistics Sweden (SCB) will be delayed until July 12.

2-3 interest rate cuts to come

The inflation target is 2 percent in both Sweden and the eurozone, and the Swedish Central Bank and the European Central Bank (ECB) have raised their policy rates in 2022-2023 to curb the unusually high inflation.

In May, the Swedish Central Bank made its first cut in the policy rate in over eight years since inflation began to approach the target level again. 2-3 cuts are expected in the second half of the year, according to the Swedish Central Bank's so-called interest rate path. The ECB has also since cut its policy rate.

How the ECB and other central banks adjust their policy rates affects the Swedish Central Bank's room to adjust its rates.

A lower policy rate affects, among other things, variable mortgage rates and financing costs in general in the economy.

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By TTThis article has been altered and translated by Sweden Herald

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