EUROPEAN INFLATION
German final January HICP was unrevised from the flash readings at 2.8% Y/Y (2.8% prior) and -0.2% M/M (0.7% prior). The final reading of national CPI was also unrevised at 2.3% Y/Y (2.6% prior) and -0.2% M/M (0.5% prior). Core CPI printed at 2.9% Y/Y (3.3% prior), the lowest rate since October 2024.
- Overall, the CPI data confirms the main conclusions from the flash reading - services decelerated slightly on the yearly rate (contribution -0.04pp vs prior) but the main deceleration came from goods (-0.25pp contribution), driven by food, alcohol and tobacco. Energy inflation meanwhile remained broadly unchanged - analysts expected some acceleration ahead of the flash release.
- The overall sequential pace on services, which was under elevated scrutiny as per the January reset effect of a wide set of subcategories, remains elevated on a historical comparison - see chart below.
- Within the services CPI subcategories, there were some considerable differences in the yearly paces since December, as projected by MNI after state-level data. There was a material slowdown in recreation and culture as well as hospitality. However, for recreation and culture, out of the 0.06pp contribution decrease, only 0.01pp came from services within the category. The 0.07pp hospitality contributions decrease was fully driven by restaurants.
203 words