Inflation up in German states, pointing to national rise

BERLIN (Reuters) – Inflation rose in five economically important German states in the month of June, preliminary data showed on Thursday, suggesting a bumpy road ahead for German inflation.

The inflation rate rose to 6.2% in North-Rhine Westphalia and Bavaria, while rising to 6.7% in Brandenburg, 6.1% in Hesse and 6.9% in Baden-Wuerttemberg.

In May, inflation rates for those five states, out of 16 in Germany, stood at between 5.7% and 6.6%.

National inflation data will be published at 1200 GMT, with economists surveyed by Reuters forecasting a 6.3% year-on-year rise, up from 6.1% in the previous month.

The data from Germany, the euro zone’s biggest economy, comes as the European Central Bank is still looking for evidence that inflation has turned a corner. June inflation data for the bloc is due on Friday.

In June of last year, in a bid to counter rising energy prices, the German government cut fuel tax and introduced a ticket allowing travel across the country for 9 euros a month. As a consequence, German inflation dipped in June 2022.

A year-on-year increase is expected in the figure for June 2023 due to the base effect from lower prices a year ago due to government relief measures.

A new subsidised travel ticket covers all local public transport for 49 euros ($54) per month, but the price is significantly above the 9 euros of the travel ticket in place during the summer months last year.

The ECB has lifted rates by a record 400 basis points over the past year and is forecast to raise rates in July and September.

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