Final German HICP inflation to confirm flash estimates at 0.1% yoy

Flash German HICP inflation softened to 0.1% yoy in June compared to 0.7% yoy in May. The national measure also softened from 0.7% yoy in May to 0.3% yoy. As for components, all the major components, namely energy, food and services, decelerated, contributing to lower inflation in June. After adding 10bp in May, Energy inflation decelerated by the same in June (10bp), from -5.0% yoy in May to -5.9% yoy in June. 

Food inflation was recorded at 1.0% yoy in June compared to 1.4% in May, reducing the headline figure by 3bp. On the core components front, services declined the most, shaving 31bp from the headline. The steep hike witnessed in prices paid for transport and packaged holidays seems to have reversed in June.

"We expect German HICP inflation to average 0.4% in 2015 and 1.7% in 2016, while the core metric should remain stable at 1.2% in 2015 and 1.4% in 2016," said Societe Generale in a report on Monday.