Re-Basing & Energy Subsidies Add Uncertainty to German CPI Print (3/3)

Uncertainty 2 – Energy Subsidies Implications: How Destatis treats the energy bill rebates remains uncertain, after the government paid December bills, potentially implying a much higher y/y print in January then December. A degree of government support (gas price caps) will be effectively backdated and not paid until March. It is unclear whether Destatis will include this subsidy in the January print.

• If Destatis were to smooth the gas price caps over Jan/Feb, and make an assumption of the delayed December energy bill payment for consumers without direct gas from supplier to be averaged at 1/12 per month, we could see German HICP disappoint this week. If not and the full effect of the rebound from the December energy bill payment would likely see CPI closer to consensus with an upward revision to EZ HICP next week.
• See here for further analysis:

MNI Germany January CPI.pdf