German inflation slows to lowest rate in four years

Friday 13 June 2014 11.46
Germany had been one of the few euro zone countries to enjoy moderate levels of inflation
Germany had been one of the few euro zone countries to enjoy moderate levels of inflation

Inflation in Germany, Europe's biggest economy, slowed to its lowest rate in four years in May, weighed down by falling energy prices, new data has shown. 

According to final data compiled by the federal statistics office Destatis, German inflation slowed to 0.9% last month, its lowest level since February 2010.

In April, the inflation rate had stood at 1.3%. 

Inflation is currently unusually low across the 18-nation euro zone, fuelling concerns the region could be on the brink of deflation - a sustained and widespread drop in prices.

While falling prices may sound good for consumers, deflation is actually dangerous for the economy because it can trigger a vicious spiral where businesses and households delay purchases, thus throttling demand and causing companies to lay off workers. 

Such concerns persuaded the European Central Bank to cut interest rates at its monthly policy meeting last week and launch a series of other measures to ease monetary conditions in the single currency area.

Using the Harmonised Index of Consumer Prices - the yardstick used by the ECB - inflation in Germany slowed to just 0.6% in May from 1.1% in April. 

The ECB defines price stability as annual inflation of just below 2%.

The final data confirm a flash estimate published on 2 June.