Preliminary consumer price data released on Tuesday for four major German states indicate a moderation in inflation during June, raising the prospect that the national inflation rate for the month may soften when federal statistics are published later in the day.
The state-level changes were small but consistent. In Bavaria the inflation rate eased to 2.5% in June from 2.6% in May. North Rhine-Westphalia and Baden-Wuerttemberg both saw inflation decline to 2.1% from 2.4% the month before. Lower Saxony recorded a fall to 2.5% in June, down from 2.7% in May.
Analysts and forecasters have taken note of the regional readings because they can foreshadow the harmonised national inflation figure. Economists polled by Reuters are expecting a harmonised national inflation rate of 2.5% for Germany in June, a decrease from 2.7% in May. National figures are scheduled for release later on Tuesday.
These regional and projected national movements occur against a backdrop in which the war in Iran has earlier contributed to upward pressure on energy and raw material prices. The German government has incorporated those pressures into its outlook, anticipating inflation to accelerate to 2.7% this year and to 2.8% in 2027.
The German data precedes a broader euro zone inflation reading due on Wednesday. Economists polled by Reuters expect inflation across the bloc to slow to 3.0% in June from 3.2% in May.
Monetary policy has already begun to respond: the European Central Bank raised interest rates in June, the first increase in nearly three years. The ECB said the move was intended to curb inflation before a recent rise in energy costs spreads more widely through the euro zone economy.
Taken together, the preliminary state data and forecasters' expectations suggest a subdued near-term path for German inflation, though national statistics and the wider euro zone figures will provide the definitive picture in the days ahead.