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Services Stickiness To Offset Goods Pullback In State CPI Data

GERMAN DATA
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A closer look at this morning's German state level flash CPI data suggests that services CPI may have accelerated on an annual basis in March. This dynamic appears to be offset by disinflation in core goods, but nonetheless means March's moderation in German core CPI is only expected to be gradual (tracking at 3.3% Y/Y vs 3.4% prior, based on states making up 50% of the national CPI basket weight).

  • MNI's tracking suggests services CPI (also based on 50% of the national basket) could print as high as 3.7% Y/Y (vs 3.4% in February).
  • Looking at the services-heavy COICOP sub-components (for which around 90% of the national CPI basket has reported data), restaurant and hotels CPI tracks at 6.4% Y/Y (vs 6.2% prior), while transport CPI tracks at 2.1% Y/Y (vs 1.6% prior). The recreation and culture component is seen moderating though, to 2.0% Y/Y (vs 2.7% prior).
  • Other major sub-components appear to be tracking as expected: Goods (based on ~67% of the national basket and including energy) is seen disinflating to 0.9% Y/Y (vs 1.8% prior), while the food and non-alcoholic beverages component (based on ~90% of the basket) tracks at 0.2% Y/Y (vs 1.6% prior).
  • The energy component is expected to remain deflationary on an annual basis in March.
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A closer look at this morning's German state level flash CPI data suggests that services CPI may have accelerated on an annual basis in March. This dynamic appears to be offset by disinflation in core goods, but nonetheless means March's moderation in German core CPI is only expected to be gradual (tracking at 3.3% Y/Y vs 3.4% prior, based on states making up 50% of the national CPI basket weight).

  • MNI's tracking suggests services CPI (also based on 50% of the national basket) could print as high as 3.7% Y/Y (vs 3.4% in February).
  • Looking at the services-heavy COICOP sub-components (for which around 90% of the national CPI basket has reported data), restaurant and hotels CPI tracks at 6.4% Y/Y (vs 6.2% prior), while transport CPI tracks at 2.1% Y/Y (vs 1.6% prior). The recreation and culture component is seen moderating though, to 2.0% Y/Y (vs 2.7% prior).
  • Other major sub-components appear to be tracking as expected: Goods (based on ~67% of the national basket and including energy) is seen disinflating to 0.9% Y/Y (vs 1.8% prior), while the food and non-alcoholic beverages component (based on ~90% of the basket) tracks at 0.2% Y/Y (vs 1.6% prior).
  • The energy component is expected to remain deflationary on an annual basis in March.