- Christian Schulz, senior economist at Berenberg Bank
Consumer prices in the Europe's powerhouse, Germany, climbed further in June, hitting the highest since December 2012, the Federal Statistical Office said on Wednesday. German inflation picked up 0.1% on the month and gained 1.8% on the year, meeting preliminary estimates. By comparison, annual inflation in April stood at 1.2%. The main contributors to this gain were increased food and energy prices, which soared 5.4% and 3.0%, respectively. Excluding food and energy prices, the inflation rate jumped 1.3% in June. According to Goldman Sachs' Germany economist, Dirk Schumacher, inflation should move sideways for the remaining months of this year. The acceleration in consumer prices came in contrast with the nation's industrial production, which recorded a growth of only 1.0%, compared to 1.8% a month earlier.
Also Wednesday, the S&P rating agency downgraded Italy's credit rating, due to the continued weakness of Italian economy. The Italian credit rating was cut to BBB from BBB+, as the Eurozone third largest economy has been in recession since the middle of 2011, while the unemployment rate is still running above 12%. S&P also said it expects the economy to contract by 1.9% this year, much worse than it expected earlier.
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