Germany's Inflation Stabilizes as Food Prices Moderately Increase

In June, Germany's inflation rate was reported at 2.0 percent, slightly lower than May's 2.1 percent. This marks a stabilization aligning with the European Central Bank's target for the eurozone. A key factor was the moderated increase in food prices, which rose by 2.0 percent, a significant drop from previous months where the rise was 2.8 percent. Meanwhile, energy prices continued their downward trend, albeit less sharply, being 3.5 percent cheaper than in the previous year. This decrease follows a 4.6 percent drop in May and a 5.4 percent fall in April.

Service prices, however, remain a central driver of inflation, with a 3.3 percent rise, slightly down from 3.4 percent in the prior month. The slight economic downturn is reflected in the labor market, where unemployment showed only a marginal decrease of 5,000 individuals, leaving the jobless rate at 6.2 percent. This rate is 0.4 percent higher than a year ago, with experts predicting a further increase in unemployment over the summer.

In the housing sector, property prices have risen again, increasing by 3.8 percent in the first quarter of 2025 compared to the previous year. This surge was primarily seen in densely populated areas, highlighting uneven economic recovery. Amid these dynamics, a significant portion of the population anticipates rising inflation due to the upcoming minimum wage increase, with differing levels of concern across political lines. As such, the economic landscape remains complex, with both inflationary pressures and growth constraints shaping expectations for the near future.