EUROPEAN INFLATION
The Bundesbank's estimate of seasonally adjusted German CPI suggests sequential core inflation momentum accelerated in September. This was driven by higher manufactured goods ex-energy, while services inflation momentum eased vs August.
- Overall core inflation increased to 0.26% M/M SA (vs 0.27% MNI estimate; 0.17% in August, 3.2% annualized) on a seasonally adjusted basis per Buba, with services inflation at 0.17% M/M (vs 0.21% MNI estimate; 0.35% in August, 3.8% annualized).
- Manufactured goods ex-energy meanwhile accelerated significantly, to 0.34% M/M, its highest rate since February (vs -0.09% in August, 4.32% annualized, no MNI estimate).
- 3M/3M measures were a bit mixed again: core ticked up to 0.70% M/M Sep vs 0.61% Aug, services remained at 1.0%, and manufactured goods ex-energy was 0.23% vs 0.00% (second consecutive uptick).
- The firmer momentum in manufactured goods ex-energy suggests that the potentially lower core goods yearly rate indicated by the state-level data out earlier might have been driven by base effects - firm conclusions remain difficult as Destatis does not provide an official core goods CPI measure.
- Moderating sequential German service inflation momentum in September will contribute to the broader case for ECB policy easing - however, 3m/3m annualized services CPI remains at 4.1% - and appears to be steadying out at a well-above pre-pandemic pace.
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