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Details Of State Level Prints Suggest Services Stickiness

GERMAN DATA
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Looking at individual drivers of German January CPI inflation based on the state-level data already published, we note the following observations in addition to our headline/core forecast already released (a reminder that we estimate national CPI (non-HICP print) at +0.1-0.2% m/m and 2.9% y/y):

  • On an annual basis, services CPI appears to be sticky, again tracking at over 3% Y/Y (vs 3.2% in December) for the six states that reported services inflation in the flash release (around 50% of the national CPI basket). This is in part due to the aformentioned rise in restuaurant VAT from January - we see the restaurants and hotels component rising around +2.0% M/M (NSA).
  • The energy component is seen reversing its Y/Y rise in December (which was driven by base effects relating to energy subsidies in December '22), with current tracking (again based on 50% of the basket) around -3.3% Y/Y. We note that energy sub-components appear to have increased on an NSA monthly basis, due to various policy changes noted in our preview.
  • Goods inflation (incl. energy) appears to have decelerated on an annual basis, to around 2.3% Y/Y (based on 67% of the national CPI basket) from 4.1% in December.
  • Food, alcohol and tobacco inflation is indicated to continue its gradual moderation on an annual basis.
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Looking at individual drivers of German January CPI inflation based on the state-level data already published, we note the following observations in addition to our headline/core forecast already released (a reminder that we estimate national CPI (non-HICP print) at +0.1-0.2% m/m and 2.9% y/y):

  • On an annual basis, services CPI appears to be sticky, again tracking at over 3% Y/Y (vs 3.2% in December) for the six states that reported services inflation in the flash release (around 50% of the national CPI basket). This is in part due to the aformentioned rise in restuaurant VAT from January - we see the restaurants and hotels component rising around +2.0% M/M (NSA).
  • The energy component is seen reversing its Y/Y rise in December (which was driven by base effects relating to energy subsidies in December '22), with current tracking (again based on 50% of the basket) around -3.3% Y/Y. We note that energy sub-components appear to have increased on an NSA monthly basis, due to various policy changes noted in our preview.
  • Goods inflation (incl. energy) appears to have decelerated on an annual basis, to around 2.3% Y/Y (based on 67% of the national CPI basket) from 4.1% in December.
  • Food, alcohol and tobacco inflation is indicated to continue its gradual moderation on an annual basis.