German consumer price inflation slowed more than expected in June, falling to 2.3% year-on-year from 2.6% in May, according to preliminary figures from the Federal Statistical Office (Destatis).
The decline was primarily driven by a sharp drop in energy prices, which helped offset persistent pressures in other sectors.
While headline inflation eased, core inflation stabilised, a development that has eased concerns among policymakers and investors that price pressures stemming from the Iran conflict could spread more widely through the German economy.
The data suggests that the impact of geopolitical tensions on consumer prices remains contained for now, rather than becoming entrenched in broader inflation dynamics.
The slowdown in inflation comes as markets have been closely monitoring the interplay between energy costs and core price stability.
The continued effect of widespread discounts and lower oil prices provided a buffer against the upward pressure from services and food prices.