- Prior +2.9%
- HICP +3.3% vs +3.2% y/y expected
- Prior +2.9%
- Core CPI Y/Y +2.4% vs +2.4% prior
Germany’s inflation rate accelerated to 3.3% y/y in September, according to preliminary data from the Federal Statistical Office (Destatis), up from 2.9% in August. Consumer prices increased 0.6% m/m, compared with a 0.2% rise in August. The release therefore shows a renewed acceleration in headline price growth.
Energy prices were the main source of additional inflation pressure. Energy costs rose 14.9% from a year earlier, accelerating sharply from 10.5% in August and 8.3% in July.
By contrast, core inflation, which excludes food and energy, remained at 2.4%, suggesting that the September acceleration in headline inflation was concentrated heavily in energy rather than reflecting an equivalent increase in underlying price pressures. The previous Destatis data also showed energy as the primary driver of August’s inflation increase.
For the ECB, the stable 2.4% core rate indicates that underlying price pressures have not broadened, which could give them enough reason to skip the October hike and wait for more data to decide whether another hike will be needed in December. ECB President Lagarde has recently said the current inflation increase is primarily linked to energy prices and that the central bank is not yet seeing significant second-round wage effects. Given the limited impact on interest rate expectations following the CPI data release, the market reaction has been rather muted.
For background, Germany’s Consumer Price Index (CPI) measures how the prices paid by households for a basket of goods and services change over time. The y7Y inflation rate compares prices with the same month a year earlier, while the m/m figure compares them with the previous month. Traders monitor CPI because inflation affects expectations for ECB interest rate policy.
This article was written by Giuseppe Dellamotta at investinglive.com.