German Inflation Stable But Low in June as ECB Plans Stimulus

(Bloomberg) -- Germany’s inflation rate was unchanged in June as an acceleration in prices for food and services was offset by a slowdown in energy costs.

Annual consumer-price growth in the Europe’s largest economy was 1.3%, in line with estimates. Earlier figures from German states showed significant increases concentrated in the cost of vegetables and package tours.

The report comes a day before inflation in the 19-nation euro area, for which economists anticipate a reading of 1.2%. That’s well below the European Central Bank’s goal and policy makers have signaled that they’re preparing to add more stimulus because of the weak outlook, largely driven by global trade tensions.

A separate report on Thursday showed economic confidence in the bloc slid more than forecast this month and is now at the weakest since 2016.

Economists in a Bloomberg survey predict a cut in the ECB’s deposit rate, already at a record-low minus 0.4%, as soon as September. Market-based inflation expectations plunged this month before paring some of the decline after President Mario Draghi said more stimulus will be needed if the outlook doesn’t improve.

--With assistance from Piotr Skolimowski.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net

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