In Germany, the CPI inflation rate in May was 2.4% year-over-year compared to 2.2% in the previous month. This reading was in line with the consensus. The index slightly increased but remains close to the ECB’s target. However, the data shows persistent price pressure in the service sector, where the price increase was 3.9% year-over-year. May PMI readings from Germany confirm that the service sector is accelerating, with the index rising to 53.9% in the latest period.
Despite this, we do not expect the ECB to make any move other than the first interest rate cut at the next meeting.
Bartosz Wałecki, Analyst at Michael / Ström Brokerage House
