by Maria Martinez
BERLIN (Reuters) – Inflation fell in five major German states in May, according to preliminary data released on Wednesday that suggested a nationwide slowdown.
In North Rhine-Westphalia, the most populous Land in Germany, price increases decelerated to 5.7%. In Bavaria it fell to 6.1%, in Brandenburg to 6.3%, in Hesse to 5.9% and in Baden-Württemberg to 6.6%.
In April, the inflation rate in these five Länder, out of the 16 in Germany, was between 6.8% and 7.6%.
National level data will be released at 12:00 GMT.
Economists polled by Reuters ahead of the release of the Länder figures forecast a slowdown in inflation to 6.5% year on year, which would be the lowest level since April 2022.
Inflationary pressures have receded in particular thanks to the introduction of a new subsidized transport ticket which allows you to use all local public transport for 49 euros per month. The elements of comparison over one year are also more favorable with regard to the evolution of energy and food prices.
Pending the official release of eurozone inflation figures on Thursday, data from various member states of the bloc suggest that price inflation may have fallen more than expected in May, while core inflation should have fallen. This should strengthen the camp in favor of a lull in the European Central Bank (ECB) rate hike in the coming months.
“Obviously the drop was bigger than what analysts had expected and I think that’s good news,” ECB Vice-President Luis de Guindos said on Wednesday.
The ECB has raised interest rates by 375 basis points since July 2022, an unprecedented pace for the institution, which nevertheless hinted this month that a further rise in the cost of credit was expected in June.
While several ECB officials, like the German Joachim Nagel and the Dutch Klaas Knot, are leaning towards rate hikes also in July, few of them are positioning themselves beyond this deadline, arguing that the evolution of inflation, in particular of basic prices, will be decisive.
Core inflation, which does not take into account volatile food and fuel prices, has remained stubbornly high in recent months, driven by accelerating wage growth in services. The current trend suggests that a major reversal is unlikely before the fall.
(Report Maria Martinez and Balazs Koranyi; French version Claude Chendjou, edited by Blandine Hénault)
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