German inflation registers slight fall in August
By Frank Prenesti
Date: Wednesday 30 Aug 2023
(Sharecast News) - German inflation recorded a slight fall in August, according to preliminary official data released on Wednesday.
Non-harmonised inflation in Germany fell to 6.1% in August from July's 6.2%.
Consumer prices, harmonised to compare with other European Union countries, increased by 6.4%.
"Inflation was virtually stable in August, but the details matter ahead of the tightly contested European Central Bank rate decision next month. On that front, this report will count as a somewhat hawkish surprise, if only slightly," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
Core inflation, which excludes volatile items such as food and energy, was 5.5% in August, unchanged from July. Food prices continued to show above-average growth, posting a 9.0% year-on-year increase. Energy prices were 8.3% higher on the year, after government relief measures kept prices lower last summer.
"The unchanged national core rate, at 5.5%, likely was stronger than markets had hoped and expected, and it also hints that the core HICP could well have increased by 0.1pp, to 6.3%, though this will be a question of rounding in the end," Vistesen said.
"These data point to upside risk for tomorrow's eurozone core inflation print, where the consensus expects a 0.2 percentage point (pp) decline, to 5.3%, and where we originally were looking for a 0.3pp fall. We now think core inflation fell by just 0.1pp, to 5.4%, with risks tilted towards an unchanged reading."
"This should be enough for the ECB hawks to count tomorrow's data as supportive for their position of a final 25 basis point hike next month. Looking further ahead, the resilience shown in today's data will evaporate soon. Core inflation is set to fall sharply in September as base effects from last year's temporarily-reduced rail fare drops out of the data, and the headline will follow as energy inflation eases back, and the fall in food inflation continues."
Reporting by Frank Prenesti for Sharecast.com
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