How did he do it?! Germany achieves an ‘unexpected’ brake on inflation and this was its ‘recipe’ – El Financiero

german inflation slowed down unexpectedly after temporary relief measures implemented by the Government reduced the pressure on families and businesses that have been affected by a record increase in prices.

Lower fuel taxes Y discounted public transport costs helped curb consumer price growth to 8.2 percent in June from 8.7 percent in May, according to data released Wednesday. Analysts surveyed by Bloomberg they expected an increase to 8.8 percent.

While it provides breathing space for Germany itself, the reading will not prevent the European Central Bank raise interest rates next month for the first time in more than a decade.

Inflation pressure remains intense in the other 19-member eurozone: Spain earlier reported a surprise rise to a record high of 10 percent, defying efforts by politicians to rein it in.

ECB officials agree with the plan to start a series of rate hikes from July, with some countries in the Baltic region – where inflation is above 20 percent – encouraging larger-than-expected hikes to be considered. planned to drive price growth toward the 2 percent target.

And German inflation may slow further

The trend could extend into next month, when it is removed a charge for renewable energy on electricity prices, but underlying price pressures are likely to remain high, according to Berenberg economist Salomon Fiedler.

Pierre Wunsch, a member of the ECB’s Governing Council, warned in an interview on Wednesday that the bank may need to raise rates more than you want whether inflation leads governments to spend ever-increasing amounts to protect households.

That suggests that measures like those in Germany, which have lowered prices temporarily, could end up having unintended consequences down the road.

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