The inflation rate in Germany fell slightly in June and is 2.3 percent.

The Federal Statistical Office announced this on Tuesday based on an initial estimate.

Energy in particular became more expensive (plus 9.4 percent).

Food prices rose by an average of 1.2 percent. 

Christian Siedenbiedel

Editor in business.

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    The inflation rates in Germany had risen from month to month this year. In May, inflation was 2.5 percent - the highest level in ten years. Last year they had been negative, so prices had fallen on average. This year, above all, more and more energy has become due. The prices for fuel and heating oil alone have increased by around a quarter compared to the previous year.

    But prices have also risen sharply in all aspects of construction, as well as for many raw materials and intermediate products such as computer chips.

    Overall import prices rose by 11.8 percent in May.

    Many things related to holidays have recently become more expensive.

    On the other hand, the prices for some types of vegetables, such as potatoes, were cheaper, as can be seen from the inflation figures published in more detail for North Rhine-Westphalia.

    From Hesse it was learned that edible fats and oils (plus 4.9), meat and meat products as well as dairy products and eggs (plus 1.8 percent each) cost more.

    Fruit, on the other hand, was 1.6 percent cheaper than in June of the previous year. 

    Price jump due to VAT

    In July, a real price jump in Germany is even expected, as there was at the turn of the year. From that month on, prices in Germany with the higher value added tax from this year are compared with prices with the lower value added tax from the previous year. That should drive up the inflation rate again. “Yes, there will be a big jump in July and August,” says Holger Schmieding, chief economist at Hamburg's Berenberg bank: “Probably by at least one percentage point overall. That is the contribution of VAT. "

    In Spain, too, inflation is now well above two percent.

    The consumer prices (HICP) surveyed according to the European method rose by 2.4 percent year-on-year, as the INE statistics office announced on Tuesday in Madrid after an initial estimate.

    The inflation rate had already been 2.4 percent in May.

    Inflation is likely to rise to 4 to 5 percent

    The Bundesbank estimates that monthly inflation rates in Germany are likely to rise to 4 percent this year.

    Some economists even estimate 5 percent.

    For the next year, lower inflation rates are expected again, even if that is not certain, long-term predictions of inflation rates are, as experience shows, difficult.

    In the euro zone, inflation reached 2 percent in May, a high in the past two and a half years.

    It was the fifth month in a row with an increase, the last time inflation was higher in October 2018.

    In its latest inflation forecast, the European Central Bank has slightly raised its forecasts for both this and next year.

    She is now forecasting 1.9 percent inflation for the euro zone this year.

    That would still be within the scope of their inflation target of “below but close to 2 percent”.

    For next year she now expects 1.5 percent instead of 1.2 percent inflation.

    Bundesbank takes the worries seriously

    Bundesbank President Jens Weidmann on Monday dampened concerns about inflation that would overshoot in the medium term. “Many people worry that as the economy recovers, inflation may return. I take these concerns very seriously, "said Weidmann at a bank conference." But the dangers of inflation should not be exaggerated in the discussion. "

    Weidmann believes that inflation rates of four percent are temporarily possible - as measured by the harmonized consumer price index HICP, which the European Central Bank (ECB) uses for its monetary policy. “That reduces the purchasing power of private households,” he said. “But their purchasing power was also increased in the previous year due to the temporary VAT reduction. And other special influences are also decisive for the rise in the rate of inflation: the climate package, higher prices for crude oil and food, and a statistical special effect on package tours. However, these factors only increase the inflation rate temporarily. "

    In the meantime, a discussion has begun in the Governing Council as to whether the central bank should not raise key interest rates but at some point slow down its bond purchases. ECB Executive Board member Fabio Panetta spoke out on Monday in favor of maintaining key elements of the fight against the pandemic even after the crisis. Bundesbank President Jens Weidmann, on the other hand, advocated ending the central pandemic bond purchase program PEPP as soon as the emergency situation was overcome. According to Austria's central bank boss Robert Holzmann, the PEPP purchases could possibly be stopped as planned in March 2022.