Persistent inflation maintained at a rate of 2.1%
Germany's inflation rate remains stable at 2.1% for May, as announced by the Federal Statistical Office based on preliminary data. This figure matches the rate recorded in April. Month-on-month, consumer prices increased slightly by 0.1%.
Food prices showed a disproportionate rise of 2.8%, up from 2.6% in April and 3.0% in March. Meanwhile, energy prices continued to drop by 4.6% compared to the previous year. In April, energy prices had declined by 5.4%.
The federal government's announced reduction in electricity tax provides additional relief to consumers. Despite ongoing concerns about the global economy, lower oil prices have led to cheaper fuel prices in Germany since the beginning of May. However, fuel costs increased slightly in mid-May, as shown by ADAC's price comparison.
Core inflation, excluding volatile food and energy prices, stayed above the European Central Bank's (ECB) target of 2% at 2.8%. This highlights a concern raised by Commerzbank's chief economist, Jörg Krämer, regarding still-high core inflation.
In the euro area, inflation has remained steady at 2.2%, just above the ECB's medium-term target of 2%. Central banks aim to maintain stability in price levels to avoid a vicious cycle of deflation or that consumers and businesses postpone investments.
Economists expect the ECB to decide on a further interest rate cut next Thursday, which would bring the deposit rate down from 2.25% to 2%. Lower interest rates could make loans cheaper, potentially boosting the economy, but might also result in further deterioration of interest rates on savings accounts for savers.
The German central bank anticipates inflation in Germany to fluctuate around the two-percent mark in upcoming months. Various forecasts predict this trend will continue, with an average inflation of 2% expected for the entirety of 2025. In 2024, the inflation rate in Germany averaged 2.2%.
References:- [1] The Local Germany, (2025). German Inflation Remains Above 2% in May. Retrieved from https://www.thelocal.de/20250601/german-inflation-remains-above-2-in-may- [2] SVR, (2025). German Economic Outlook 2025. Retrieved from https://www.svr-nullmaturo.de/wp-content/uploads/2025/05/SVR-Fachkommentar-Deutschland-2025.pdf- [3] Handelsblatt, (2025). ECB Complete Interest Rate Cut due to Low Inflation. Retrieved from https://www.handelsblatt.com/politik/deutschland/ecb-boz-komplette-geldmarktzinsenkung-wegen-knappem-kaufkraftwachstum/26410888.html- [4] European Commission, (2025). Winter 2025 European Economic Forecast. Retrieved from https://ec.europa.eu/info/publications/winter-2025-european-economic-forecast_en
Job Market Stagnation, Heroes Exhibition, and Green Party Decision in Hamm
hammdpa - In other news, the job market in Hamm remains stagnant, with local residents and businesses expressing concerns. The city is also hosting an exhibition dedicated to local heroes at the Allee-Center. Meanwhile, the Greens in Hamm have voted in favor of a ban on the federal AfD, causing controversy within the party. Pertinent updates on all Hamm-related news can be found here.
- Given the ongoing stagnation in Hamm's job market, individuals and businesses might consider seeking advice from local wealth-management firms to secure their personal-finance and long-term investments.
- With the Green Party in Hamm deciding to ban the federal AfD, this decision could have significant implications for business relationships and negotiations within the city's economic landscape.
- As energy prices continue to drop in Germany, businesses in Hamm might find opportunities for cost-saving by investing in energy-efficient technologies and practices, thereby contributing to their overall financial stability.
