Preliminary figures released on Friday showed inflation slowed across four major German states in May, reinforcing expectations that the country’s overall inflation rate could decline slightly this month despite continued pressure from energy costs linked to the conflict in Iran.
Data from Bavaria showed inflation easing to 2.6% in May from 2.9% in April. North Rhine-Westphalia recorded a drop to 2.4% from 2.7%, while Baden-Wuerttemberg saw inflation slow to 2.4% from 2.6%. In Lower Saxony, the rate declined to 2.7% after standing at 3.0% the previous month.
Although inflationary pressures appear to be moderating in parts of Germany, rising energy and commodity prices tied to the war in Iran have continued to weigh on the broader economic outlook. The German government currently expects inflation to rise to 2.7% this year and increase further to 2.8% in 2027.
Economists surveyed by Reuters expect Germany’s harmonised national inflation rate calculated for comparison across the euro zone to come in at 2.8% in May, slightly lower than the 2.9% recorded in April.
Germany’s national inflation figures are scheduled for release later on Friday.
The data also comes ahead of next week’s euro zone inflation report. Analysts forecast inflation across the bloc to reach 3.3% in May, compared with 3.0% in April, according to a Reuters poll.
The European Central Bank left interest rates unchanged during its April meeting, but persistently elevated inflation across the euro area has strengthened expectations that policymakers could take further action in the coming months.
Goodness Anunobi
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