Inflation in June: Prices fall – Euro remains strong and stable!

Inflation in June: Prices fall – Euro remains strong and stable!

According to preliminary figures, the inflation rate in Germany fell to 2.0 percent in June 2025 Deutschlandfunk reported. A decline is explained in particular by the share of energy costs, which fell by 3.5 percent compared to the same period last year. This contrasts with developments in the food sector, where prices rose by 2.0 percent, although less than the previously recorded +2.8 percent in May.

The rising prices for services, which increased by 3.3 percent, are also significant. This increase is often attributed to increased wages. Despite the uncertainty about future inflation developments due to US President Trump's aggressive tariff policy, a stable trend is emerging. The EU also announced negotiations with the USA to avert a trade war.

Influence of the geopolitical situation

According to Deutschlandfunk reports, the conflict between Israel and Iran had no significant impact on crude oil and fuel prices. The strong euro, in turn, has a dampening effect on the price situation in Germany as it makes imports cheaper. The Bundesbank expects the inflation rate to fluctuate around the two percent mark in the coming months.

The European Central Bank's (ECB) price stability target is, as usual, 2.0 percent. Economists expect an annual average of around 2.0 percent for 2025. This shows that economic indicators in the Eurozone remain on a stable path, although in August 2024 there was a decline in the inflation rate to 2.2 percent, which was the lowest level in three years, according to daily news.

Interest rate policy and future expectations

Given the declining level of inflation, experts expect rising inflation figures in the coming months. This could give the ECB reason to consider interest rate cuts. In June 2024, the key interest rate was already cut from 4.50 percent to 4.25 percent, and further rate cuts in September 2024 are now considered likely.

In summary, the current inflation situation in Germany is relatively stable, with factors such as energy costs and wages having a clear influence on price developments. The persistence of the euro and political negotiations could be crucial to overcoming future economic challenges.