Preliminary June inflation figures for Germany released on Monday showed inflation easing again, with prices 2.2% higher than the same month last year.
That is a decline from the 2.4% figure for May, according to preliminary figures released by the Germany's Federal Statistical Office.
Core inflation, which excludes volatile prices for food and energy, amounted to 2.9%. While services in particular became more expensive, energy became cheaper in June.
Compared to May, prices rose by 0.1% in June, according to the preliminary figures.
Economist Sebastian Dullien from the labour-affiliated Institute for Macroeconomics and Economic Research (IMK) said the slight bump in inflation in May was an outlier.
"The downward trend in inflation is intact and has now reasserted itself in June. A further slight decline in inflation is expected in the coming months," he said.
A recent survey of German companies about plans for pricing by the Munich-based ifo Institute also indicated that inflation is likely to continue declining.
"The inflation rate will likely continue its slow decline and fall below the 2% mark in August for the first time since March 2021," said Timo Wollmershäuser, ifo's head of economic research.
If inflation falls in Germany, and in the eurozone as a whole, it would give the European Central Bank (ECB) leeway to cut key interest rates further over the course of the year. The ECB considers the 2% inflation mark a key target.
In June, the ECB lowered its key interest rates by 0.25 percentage points for the first time since the wave of inflation hit the currency area. At the same time, ECB President Christine Lagarde sought to dampen expectations of further interest rate cuts.
Inflation accelerated rapidly after Russia launched its full-scale invasion of Ukraine in early 2022. Energy prices in particular shot upwards, which also impacted the cost of industrially produced goods and imports.
The European Union restricted oil imports from Russia and imposed further sanctions. Moscow, in turn, stopped exporting gas to Germany via the Nord Stream pipelines.
