HICP Slightly Higher Than Expected; Services Accelerates

The German national flash May HICP print came slightly higher than consensus at +2.8% Y/Y (vs 2.7% cons; 2.4% prior) and +0.2% M/M (vs 0.2% cons; 0.6% prior).

• Headline, core and the major sub-components of national CPI inflation all came in closely in line with MNI's tracking estimates based on the state-level data.
• National flash CPI was 2.4% Y/Y (vs 2.4% cons; 2.2% prior) and +0.1% M/M (vs 0.2% cons; 0.5% prior). Core CPI (excl. food and energy) remained at 3.0% Y/Y.
• Of the major sub-components, services CPI is the most closely watched and it accelerated to 3.9% Y/Y (vs 3.4% prior), while goods CPI inflation decreased to 1.0% Y/Y (vs 1.2% prior).
• There were two major drivers to services CPI acceleration: first, the base effect of a subsidized rail ticket which was introduced a year ago falling out of the yearly comparison. Second, continued stickiness in leisure industries: the restaurants and hotels and package holidays categories printed at elevated levels relative to their historical May M/M levels.
• The data imply slight upside risks to Friday's Eurozone-wide HICP consensus, which sits at 2.5% for headline.