(MENAFN) Preliminary figures released on Monday indicate that Germany's inflation rate remained stable at 2.2 percent on an annual basis in April, marking its lowest level since April 2021. According to data from the German statistics office, Destatis, the inflation rate excluding volatile food and energy prices saw a slight decrease to 3 percent, down 0.3 percent from March. This stabilization in inflation rates has raised speculation about the possibility of interest rate cuts within the eurozone.
Ulrich Katter, an economist at Dekabank, noted that the continued decline in core inflation provides impetus for the European Central Bank (ECB) to consider lowering interest rates in June. Recent statements from ECB leaders, including President Christine Lagarde, have hinted at the potential for such measures, particularly given the absence of any significant inflation surprises across the eurozone during the spring.
In Germany specifically, prices experienced a 0.5 percent increase within the span of a month. Energy prices, which have been a primary driver of inflation for the past two years, saw a modest decrease of 1.2 percent compared to April 2023. However, this decline was less pronounced than in March (-2.7 percent), attributed to higher fuel prices and the cessation of a temporary VAT cut in April, particularly impacting gas and heating prices.
Meanwhile, food prices in Germany rose by 0.5 percent over the course of one month, rebounding from a 0.7 percent decrease in March. These fluctuations in key economic indicators, coupled with the stable inflation rate, suggest a complex economic landscape that could influence future monetary policy decisions, particularly within the eurozone. As the ECB prepares for its next meeting in June, the trajectory of inflation and its potential implications for interest rates will likely remain under close scrutiny.
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