Germany CPI y/y (%)
Inflation is back on the menu in Europe and today we’ll be getting the usual monthly readings from German states, all before the national reading later in the day. As outlined here, an adjustment to base effects is still very much in play and that should see annual price pressures fall further in May.
The headline annual inflation in Germany is estimated to come in at 6.5%, down from 7.2% previously. Meanwhile, the EU-harmonised reading is estimated to be at 6.8%, down from 7.6% previously. All of that, if within expectations, will be a welcome development but it remains to be seen if inflation can actually stay on trend to move towards 2% again.
In any case, core inflation pressures are still rather rampant in the euro area with food inflation still holding high. That will provide the ECB with little comfort even if the headline figures are starting to show further signs of moderation this year.
The data should just validate the current ECB sentiment but if there is little progress on the downwards trend in core prices towards Q3 this year, expect that to be a cause of concern for markets as stagflation risks creep in.
Here’s the agenda for today:
- 0530 GMT – North Rhine Westphalia
- 0800 GMT – Brandenburg
- 0800 GMT – Hesse
- 0800 GMT – Bavaria
- 0800 GMT – Baden Wuerttemberg
- 0900 GMT – Saxony
- 1200 GMT – Germany national preliminary figures
Do note that the releases don’t exactly follow the schedule at times and may be released a little earlier or later.