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EUROPEAN INFLATION: German State-Level Details Point Towards Lower Services

EUROPEAN INFLATION
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Looking a bit closer at this morning's German CPI state level September inflation data, core and services inflation appear to have slowed, while for goods the data points towards a broadly unchanged yearly rate on the back of firmer food inflation. Overall, analyst's expectations ahead of the release appear to have broadly materialized in February.

  • Looking at the categories with heavy services weighting, we see decelerations in healthcare (2.7-2.8% vs 3.1% Jan), communication (-1.2% to -1.3% vs -0.9% Jan), recreation and culture (1.1-1.2% vs 1.7% prior) and restaurants and hotels (note a base effect is dampening here, we see it around 4.2% vs 4.4% Jan). Education seems to have accelerated noticeably, meanwhile (around 5.4% vs 4.7% Jan).
  • Food (incl. alcoholic beverages, distinct category to food-only published by Destatis later) inflation appears to have seen a pronounced bump, to around 2.9% Y/Y (1.4% Jan) - in line with Goldman Sachs' expectations ahead of the release for a higher unprocessed food category this month.
  • Core goods overall seem to have decelerated again - we see clothing and footwear very broadly around 0.6% Y/Y (2.9% Jan) but furnishings and household equipment a bit firmer than before, around -0.7% Y/Y (-0.8% Jan).
  • Note that the above gives an indication of the national CPI rather than HICP, but we have already seen services inflation decelerate in the French and Italian prints this morning.
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Looking a bit closer at this morning's German CPI state level September inflation data, core and services inflation appear to have slowed, while for goods the data points towards a broadly unchanged yearly rate on the back of firmer food inflation. Overall, analyst's expectations ahead of the release appear to have broadly materialized in February.

  • Looking at the categories with heavy services weighting, we see decelerations in healthcare (2.7-2.8% vs 3.1% Jan), communication (-1.2% to -1.3% vs -0.9% Jan), recreation and culture (1.1-1.2% vs 1.7% prior) and restaurants and hotels (note a base effect is dampening here, we see it around 4.2% vs 4.4% Jan). Education seems to have accelerated noticeably, meanwhile (around 5.4% vs 4.7% Jan).
  • Food (incl. alcoholic beverages, distinct category to food-only published by Destatis later) inflation appears to have seen a pronounced bump, to around 2.9% Y/Y (1.4% Jan) - in line with Goldman Sachs' expectations ahead of the release for a higher unprocessed food category this month.
  • Core goods overall seem to have decelerated again - we see clothing and footwear very broadly around 0.6% Y/Y (2.9% Jan) but furnishings and household equipment a bit firmer than before, around -0.7% Y/Y (-0.8% Jan).
  • Note that the above gives an indication of the national CPI rather than HICP, but we have already seen services inflation decelerate in the French and Italian prints this morning.