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State Level Details Suggest Stable Y/Y Inflation Across Services

GERMAN DATA
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Looking at individual drivers of German February CPI inflation based on the state-level data already published, we note the following observations in addition to our headline/core forecast already released. A reminder that we estimate national CPI (non-HICP print) at +0.5% m/m and +2.6% y/y and core CPI at +0.6-0.7% M/M and +3.5% Y/Y - which would appear to be stronger than expectations coming into the day:

  • On an annual basis, services CPI appears to be sticky, again tracking in the mid-3% range (vs 3.4% in December) for the six states that reported services inflation in the flash release (around 50% of the national CPI basket).
  • Looking at the individual subcategories, all of healthcare, transport, communication, recreation and culture, education, and restaurants and hotels printed largely in line with or higher than January's figures on a Y/Y basis.
  • Goods inflation (incl. energy) appears to have decelerated further on an annual basis, to around 1.8% Y/Y (based on 67% of the national CPI basket) from 2.3% in December, seemingly driven by strong disinflation in the food and non-alcoholic beverages category.
  • Sequentially, the state data looks a little more mixed: M/M upside vs January came from clothing and recreation and culture, with education and restaurants/hotels pulling back.
  • However, as a reminder, these are not seasonally adjusted figures - our initial estimates suggest a robust print for core on a M/M SA basis (was 0.4% M/M in Jan - with services strong vs typical months, but slowing from January's 0.5% SA print). We will get more detail after the national print at 1300GMT, with the Bundesbank's usual SA M/M calculation to follow later in the day.
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Looking at individual drivers of German February CPI inflation based on the state-level data already published, we note the following observations in addition to our headline/core forecast already released. A reminder that we estimate national CPI (non-HICP print) at +0.5% m/m and +2.6% y/y and core CPI at +0.6-0.7% M/M and +3.5% Y/Y - which would appear to be stronger than expectations coming into the day:

  • On an annual basis, services CPI appears to be sticky, again tracking in the mid-3% range (vs 3.4% in December) for the six states that reported services inflation in the flash release (around 50% of the national CPI basket).
  • Looking at the individual subcategories, all of healthcare, transport, communication, recreation and culture, education, and restaurants and hotels printed largely in line with or higher than January's figures on a Y/Y basis.
  • Goods inflation (incl. energy) appears to have decelerated further on an annual basis, to around 1.8% Y/Y (based on 67% of the national CPI basket) from 2.3% in December, seemingly driven by strong disinflation in the food and non-alcoholic beverages category.
  • Sequentially, the state data looks a little more mixed: M/M upside vs January came from clothing and recreation and culture, with education and restaurants/hotels pulling back.
  • However, as a reminder, these are not seasonally adjusted figures - our initial estimates suggest a robust print for core on a M/M SA basis (was 0.4% M/M in Jan - with services strong vs typical months, but slowing from January's 0.5% SA print). We will get more detail after the national print at 1300GMT, with the Bundesbank's usual SA M/M calculation to follow later in the day.