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Dec Final Data Shows Continued Disinflation In Highest CPI Items


German final December HICP was unrevised from the flash readings as expected at 3.8% Y/Y (+2.3% Nov) and 0.2% M/M (-0.7% Nov). The final reading of CPI was also unrevised at 3.7% Y/Y (+3.2% Nov) and 0.1% M/M (-0.4% Nov). Core CPI printed at 3.5% Y/Y (+3.8% Nov), and CPI inflation for total 2023 printed at 5.9% Y/Y on average (6.9% 2022). For the monthly headline CPI Y/Y, this was the first uptick after five declines in a row.

  • The split among the main December CPI components confirmed the flash reading. Goods prices printed at +4.1% Y/Y, with services at +3.2% Y/Y.
  • Energy was the main riser compared to November, at +4.1% Y/Y (vs -4.5% Nov) on base effects from energy subsidies starting last December. Looking at underlying drivers from the subcategories that weren't available in the flash reading: natural gas prices increased +34% Y/Y and district heating prices +58% Y/Y. Light heating oil prices decreased -11% Y/Y, and fuel prices came in at -1.1% Y/Y. On a monthly comparison, however, energy prices showed progress and declined -1.9% M/M.
  • Food prices, which were one of the main upside drivers of inflation in 2023 as a whole, saw some disinflation, coming in at +4.6% Y/Y (+5.5% prior).
  • Notable items within core inflation were package holidays at +3.0% Y/Y and restaurant and hospitality services at +5.6% Y/Y. A subsidised public transport ticket introduced in May 2023 (“Deutschlandticket”) continued to account for a low Y/Y figure for train and bus tickets (-22.9% Y/Y).
  • MNI’s HICP inflation breadth indicator (see chart below) shows disinflation progressing across higher-end outliers, with the percentage of categories printing at above 6% decreasing clearly to 26.9%, down from 33.6% in November. However, only 29.2% of categories printed below 2% Y/Y inflation in December (29.5% prior), with the rebound in energy categories only partially offset by disinflation in other categories.
  • The January inflation print will be subject to increased uncertainty, driven by yearly price recalculations and various changes to tax rates.

MNI, Destatis

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