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Rather Encouraging CPI Details Despite Services Acceleration (1/2)

GERMAN DATA
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German final April HICP was unrevised from the flash readings at +2.8% Y/Y (+2.4% Apr) and +0.2% M/M (+0.6% Apr). The final reading of CPI was also unrevised at +2.4% Y/Y (+2.2% Apr) and +0.1% M/M (+0.5% Mar). Core CPI printed at +3.0% Y/Y (+3.0% Mar), the lowest since March 2022.

  • The final major CPI components confirmed the flash estimates: goods prices printed at +1.0% Y/Y (+1.2% Apr), services at 3.9% (+3.4% Apr). The acceleration in services inflation appears to be fully driven by the transport category on the back of the base effect on a subsidized public transport ticket ('Deutschlandticket').
  • Specifically, transport came in at 2.6% (vs 0.9% Apr) - this means it added broadly about 0.38pp to the headline figure (0.13pp Apr) and 0.84pp to services (0.29 Apr) - which is even more than MNI initially estimated, and which shows that services inflation would have been broadly stable barring that base effect. The Deutschlandticket had been weighing on inflation over the past year due to base effects.
  • Stability was also apparent when looking at the other services subcategories: healthcare (2.7% Y/Y May vs 2.9% Apr), recreation and culture (1.8% vs 1.8%), insurance (13.0% vs 13.1%), and restaurants and accommodation (6.3% vs 6.4%) all showed little change in their respective yearly rates.
  • On the headline front, energy remained in deflationary territory but ticked up further slightly vs April at -1.1% Y/Y (-1.2% Apr). Looking at the subcategories that weren't available in the flash reading, household energy prices came in at -3.3% Y/Y (-3.2% Apr), and petrol at +2.2% (+2.0%).
  • Food prices, which were one of the main inflation upside drivers through 2023 but had cooled towards the end of the year, printed similar to April, at +0.6% Y/Y (0.5%).
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German final April HICP was unrevised from the flash readings at +2.8% Y/Y (+2.4% Apr) and +0.2% M/M (+0.6% Apr). The final reading of CPI was also unrevised at +2.4% Y/Y (+2.2% Apr) and +0.1% M/M (+0.5% Mar). Core CPI printed at +3.0% Y/Y (+3.0% Mar), the lowest since March 2022.

  • The final major CPI components confirmed the flash estimates: goods prices printed at +1.0% Y/Y (+1.2% Apr), services at 3.9% (+3.4% Apr). The acceleration in services inflation appears to be fully driven by the transport category on the back of the base effect on a subsidized public transport ticket ('Deutschlandticket').
  • Specifically, transport came in at 2.6% (vs 0.9% Apr) - this means it added broadly about 0.38pp to the headline figure (0.13pp Apr) and 0.84pp to services (0.29 Apr) - which is even more than MNI initially estimated, and which shows that services inflation would have been broadly stable barring that base effect. The Deutschlandticket had been weighing on inflation over the past year due to base effects.
  • Stability was also apparent when looking at the other services subcategories: healthcare (2.7% Y/Y May vs 2.9% Apr), recreation and culture (1.8% vs 1.8%), insurance (13.0% vs 13.1%), and restaurants and accommodation (6.3% vs 6.4%) all showed little change in their respective yearly rates.
  • On the headline front, energy remained in deflationary territory but ticked up further slightly vs April at -1.1% Y/Y (-1.2% Apr). Looking at the subcategories that weren't available in the flash reading, household energy prices came in at -3.3% Y/Y (-3.2% Apr), and petrol at +2.2% (+2.0%).
  • Food prices, which were one of the main inflation upside drivers through 2023 but had cooled towards the end of the year, printed similar to April, at +0.6% Y/Y (0.5%).