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Germany’s Inflation Rate Falls to 0.1% in June: EWG Falls 4.03%

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EWG fell 4.03% on June 29

The iShares MSCI Germany ETF (EWG) fell 4.03% on June 29 due to:

  1. Rising fears of a looming Grexit are affecting European, as well as, global equity—as we discussed in Part 1.
  2. Germany’s inflation rate fell to 0.1% in June, despite the ECB’s (European Central Bank) monetary easing measures.

European equities have been demonstrating rising volatility lately—especially as the deadline for Greece’s repayment to its creditors draws near. On June 29, the Vanguard FTSE Europe ETF (VGK) fell 3.50%, while the SPDR DJ Euro STOXX 50 ETF (FEZ) fell 4.51%. The Global X FTSE Greece 20 ETF (GREK) fell 19.44%. Stocks of European companies trading on US exchanges also shared the gloom. While Deutsche Bank (DB) and Lloyds Banking Group (LYG) fell 6.67% and 2.54% on June 29, Statoil (STO) fell 2.98%.

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Germany’s inflation rate fell to 0.1% in June

The EU (European Union) harmonized inflation rate in Germany fell to 0.1% in June on a YoY (year-over-year) basis from May’s 0.7%. The inflation rate in Germany was being pumped by the ECB’s monetary stimulus package. As you can see in the above chart, Germany emerged from deflation in February. The inflation rate in the economy has been rising since then. In June, the inflation fell from 0.7% in May to 0.1% in June.

On a month-over-month basis, Germany recorded a 0.20% fall in the EU harmonized CPI (consumer price index).

In June, economic confidence weakened in the Eurozone—as indicated by the ESI (Economic Sentiment Indicator) and BCI (Business Climate Indicator) readings. We’ll discuss these readings in the next part of this series.

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