German Inflation Rises: Will the ECB Stay Away from Stimulus?



German inflation rises by 0.3%

Consumer prices in Germany increased by 0.3% on an annual basis for June—in line with expectations and above a 0.1% rise in the previous month. The increase was primarily driven by a rise in costs in the services sector even though there wasn’t a significant rise in energy prices. Rising food prices also contributed to the higher inflation rate in June. The price growth in Germany could signal an increase in inflation levels. This would lessen some pressure on the ECB (European Central Bank) to announce fresh stimulus measures in light of the United Kingdom’s referendum and its impact on the Eurozone’s economy. The figure could reinforce ECB chief Mario Draghi’s stance to keep the policy constant in the next meeting. The iShares MSCI Germany ETF (EWG) rose by 1.8% on July 8, while the iShares MSCI Eurozone ETF (EZU) rose by 1.9% on July 12 at 3 PM EST. The ECB is expected to wait and watch how the Bank of England’s monetary policy pans out on Thursday before looking at any major action.

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Swedish inflation rises

The inflation rate in Sweden rose by 1.0% in June—in line with expectations and against a 0.6% rise on an annual basis in the previous month. A rise in housing costs and utility prices contributed to the increase. On a monthly basis, consumer prices in Sweden rose by 0.1% in June—compared to 0.2% growth in May. Among other Scandinavian releases on Monday, consumer prices increased for Norway and Denmark. The iShares MSCI Sweden ETF (EWD) rose by 1.2% on July 12 at 3 PM EST. To learn more, read Scandinavian Indexes Rally as Inflation Rises in Norway and Denmark.

BOE meeting minutes and Portuguese inflation rate

According to the meeting minutes released by the Bank of England, the central bank pointed towards more intervention in order to maintain stability. The iShares MSCI United Kingdom ETF (EWU) rose by 1.2% on July 12 at 3 PM EST, while the Vanguard FTSE Europe ETF (VGK) increased by 1.6%.

Also, the inflation rate in Portugal increased by 0.5% on an annual basis in June—compared to a 0.3% rise last month. On a monthly basis, Portuguese inflation rose by 0.1% in June—compared to 0.3% last month.


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