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EUROPEAN INFLATION: DE State-Level Details Point Toward Slightly Softer Services

EUROPEAN INFLATION
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Looking a bit closer at this morning's German state level November inflation data, goods inflation appears to have picked up further, while for services, the data points towards a slightly softer yearly rate than last month. Energy ticked up significantly, as expected.

  • Looking at the categories with heavy services weighting, an overall likely slight deceleration to around 3.9% Y/Y (4.0% Oct) appears quite broad based. We see the biggest move in recreation and culture, at around 1.3-1.4% Y/Y (from Oct +1.8%). Elsewhere, we see education at 5.0% (5.2% Oct), restaurants and hotels around 5.9-6.0% (6.1% Oct), communication -1.6 to -1.7% (-1.6% Oct), and healthcare 2.7-2.8% (2.7% Oct).
  • On energy: We see the category around -3.7% Y/Y - that is a significant uptick vs October's -5.5% but is expected on the back of a base effect; the sequential rate was likely negative.
  • The mixed-weighting transport category will likely come in around +0.3 to +0.4% Y/Y - clearly higher than October's -0.3%, driven by the mentioned energy base effects.
  • Food inflation appears to have decelerated quite a bit, to broadly around 2.4% Y/Y (2.8% Oct).
  • Core goods inflation should have increased a little, meanwhile: We see clothing and footwear at around 2.9-3.0% Y/Y (2.3% Oct), and furnishings and household equipment at -0.7 to -0.8% (-1.0% Oct).
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Looking a bit closer at this morning's German state level November inflation data, goods inflation appears to have picked up further, while for services, the data points towards a slightly softer yearly rate than last month. Energy ticked up significantly, as expected.

  • Looking at the categories with heavy services weighting, an overall likely slight deceleration to around 3.9% Y/Y (4.0% Oct) appears quite broad based. We see the biggest move in recreation and culture, at around 1.3-1.4% Y/Y (from Oct +1.8%). Elsewhere, we see education at 5.0% (5.2% Oct), restaurants and hotels around 5.9-6.0% (6.1% Oct), communication -1.6 to -1.7% (-1.6% Oct), and healthcare 2.7-2.8% (2.7% Oct).
  • On energy: We see the category around -3.7% Y/Y - that is a significant uptick vs October's -5.5% but is expected on the back of a base effect; the sequential rate was likely negative.
  • The mixed-weighting transport category will likely come in around +0.3 to +0.4% Y/Y - clearly higher than October's -0.3%, driven by the mentioned energy base effects.
  • Food inflation appears to have decelerated quite a bit, to broadly around 2.4% Y/Y (2.8% Oct).
  • Core goods inflation should have increased a little, meanwhile: We see clothing and footwear at around 2.9-3.0% Y/Y (2.3% Oct), and furnishings and household equipment at -0.7 to -0.8% (-1.0% Oct).