Bundesbank: Inflation Expected to Fluctuate Sideways in Coming Months

20 June 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – German inflation rates will vary around a middle level over the next several months, the German Bundesbank on Thursday in its latest monthly report.

‘In the coming months, the inflation rate is likely to fluctuate sideways. This is mainly due to the volatility of energy prices over the past year. Base effects are likely to contribute to the inflation rate falling somewhat until September, but then rising again until the end of the year’, the Bundesbank said.

According to the report, the disinflation process might be slower than expected due to strong wage growth.

‘While the German economy is still facing headwinds, there are increasing bright spots’ such as improved industrial production and foreign demand, the report said.

Significant changes in the labour market were unlikely, the report said. ‘Since employment has held up surprisingly well during the past two years of economic weakness, the need for recruitment is unlikely to be particularly pronounced when the economy recovers.’

Unemployment rose noticeably in May, with 25,000 more people unemployed than in April, the Bundesbank noted, adding that the unemployment rate remained the same at 5.9%.

‘The expectation of an imminent end to rising unemployment, which has arisen in recent months, has been dampened by the latest IAB barometer. It dropped back into negative territory in May’, the report said.