By Maria Martinez
BERLIN -Inflation fell in three important German states in June, preliminary data showed on Monday, suggesting the country’s national inflation rate could ease this month.
In Bavaria, the inflation rate fell in June to 1.8% from 2.1% in the previous month, in North Rhine-Westphalia it fell to 1.8% from 2.0% and in Lower Saxony it fell to 2.2% from 2.3% in May.
In Baden-Wuerttemberg, however, the inflation rate increased slightly to 2.3% from 2.2% in the previous month.
Economists polled by Reuters had forecast a harmonised national inflation rate in Germany – the euro zone’s largest economy – of 2.2% in June, up from 2.1% in the previous month.
National figures will be released later on Monday.
The German data comes ahead of the euro zone inflation release on Tuesday. Inflation in the bloc is expected at 2.0% in June, the European Central Bank’s goal, up from 1.9% in the previous month, according to economists polled by Reuters.
The ECB cut interest rates at the beginning of June but hinted at a pause in its year-long easing cycle after inflation finally returned to its 2% target.
“Overall, it can probably be stated that the period of high inflation is, for the time being, over,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
The reasons are a stronger euro, which results in lower import prices, a greater supply of goods from Asia as they can no longer be sold to the U.S., and weak consumer demand, as was recently underscored by the decline in retail sales.
Retail sales unexpectedly fell by 1.6% in May compared with the previous month.
(Editing by Matthias Williams and Saad Sayeed)
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