German Import Prices Unexpectedly Hold Flat in May, Annualized Rate Falters on Lower

German May import prices were unchanged over the month and dropped 10.4% y/y. This was weaker than our forecast and median for readings of 0.3% m/m and -10.1% y/y. The annual rate remains heavily impacted by positive base effects from lower energy prices compared to last year and excluding energy prices dropped just 4.7% y/y. However, short term dynamics show that the most recent pick up in oil prices has dampened the monthly decline and excluding energy prices would have dropped 0.8% m/m. So oil prices are not the only factor that are dragging overall import prices lower and the dampening effect will keep consumer price inflation in negative territory for the coming months at least.