Inflation data coming from the various German states points to a significantly lower CPI read for December. Could we see outright deflation in the euro-zone already for the of 2014?
The full German release is due later on, and the euro awaits it in fear.
Some year over year figures:
- North Rhine Westphalia, which is considered one of the most important states in the German heartland, saw a fall from 0.7% to 0.1%.
- Hesse has a flat 0% read for December after 0.5% in November.
- Bavaria also sees a 0.5% fall from 0.8% to 0.3%.
- Brandenburg has 0.3%, down from 0.7%
While German inflation is probably due to remain positive for the month of December, the locomotive’s numbers have always been above the euro-zone average and we could certainly see a negative number for the whole euro-zone. It is released tomorrow.
For example, Spain reported a fall of no less than 1.1% in prices. This was released before the turn of the year and has already hurt the common currency.
Also the worries about Greece weigh.
More: EUR/USD collapses fast – 6 reasons – Nomura
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