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- Kristian Toedtmann, an economist at Dekabank
German inflation is likely to slow in July for the first time in three months, indicating price gains in Europe's powerhouse economy remain subdued. Germany's consumer price index increased 1.8% from the previous year compared to 1.9% in June with prices probably rising 0.1% on month, according to the economists estimations. The Bundesbank expects German inflation will be 1.6% this year and 1.5% in 2015. The central bank cut its 2013 growth forecast for Germany last month from 0.4% predicted in December, referring to worse-than-expected first quarter and saying that Europe's sovereign debt crisis is still a major threat to the economic recovery. The data will be published throughout today before the Federal Statistics Office reveals nation figures.
Meanwhile, consumer prices in the Euro bloc climbed 1.6% in June from 1.4% a month earlier and 1.2% in April as energy prices rebounded. The ECB revised downward its 2013 inflation forecast for the Eurozone to 1.4% from 1.6%, while kept the 2014 estimate flat at 1.3%.
It is widely expected that the ECB will keep its key interest rate unchanged at a record low of 0.5%, when the officials meet this week. ECB President promised to keep rates exceptionally low for an extended period to help the Eurozone economy revive.