THE TAKEAWAY: German CPI eased in May -> Pullback caused by reduction of energy prices -> Euro weak on the day
German May inflation numbers came in softer than expected, fueled by a decline in energy prices. The yearly consumer price index in Europe’s largest economy eased to 2.1% from 2.2% in April, which was also the expected number for May. Inflation fell 0.3% on the month.
The relief in inflation pressures was attributed to a drop in oil prices as political tensions in the Persian Gulf show signs of easing. Speculation that Greece will exit the Euro region continues to curb consumer spending from companies and households, although record low unemployment rates in Germany have contributed to rising demand.
The Euro remained weak on the day after the German CPI release. The single currency has fallen sharply against the Greenback and Yen over recent weeks as instability in Greece threatens its security. Markets remained poised to absorb upcoming US consumer confidence numbers later on Tuesday.
