Inflation in Germany rose less than previously thought in May, the Federal Statistics Office reported on Thursday. Germany’s harmonised index of consumer prices rose 0.2 percent month-on-month and 1.4 percent year on year, compared with initially reported rates of 0.3 percent and 1.5 percent, the Office said. Meanwhile, it was revealed today that Germany?s trade surplus narrowed in April as imports surged. After accounting for expected seasonal factors, the surplus declined from 14.7 billion euros to 12.6 billion. The smaller surplus reflected a 0.4 percent fall in exports and a 3.8 percent jump in imports, the data showed.
The downward drift in inflation needs careful monitoring. I’ve got a deflation alert call out on Germany remember. If Germany goes through the inflation wall, then the proverbial s*** really will hit the fan, since I can’t see the ECB doing non-conventional monetary policy. Come to think of it, maybe that’s what the meeting with Fels was all about.