Analysts at Rabobank point out that today sees the release of German inflation numbers for August and the consensus is looking for no change in YoY rates in both the national as well as the headline number.
Key Quotes
“We feel the risk to this forecast is tilted slightly to the upside. On the one hand, fuel costs were probably slightly lower on balance during mid-August, as compared to mid-July (on the back of lower oil prices in EUR terms), but this was probably offset by a relatively sharp rise in electricity prices.”
“Food price inflation already came down quite sharply in July, with developments on global agri markets suggesting that this development continued in August. The HWWI agricultural raw materials index has slowed from a peak of +27% YoY in early June to under +15% YoY during August.”
“Meanwhile, German core inflation remained stuck at 1.4% in July, its lowest level in 10 months, but the relentless tightening in German labour market conditions is finally filtering through to rising compensation levels (compensation per employee was up by 2.8% YoY in June, the highest level in two years).”
“Even though the pass-through to consumer prices isn’t straightforward – there is no reason to expect core inflation to fall further. Indeed, if anything, a higher core inflation rate probably constitutes the biggest upside risk to today’s numbers. The official release for the national and harmonized figures is at 14:00CET, but this is preceded by a slew of figures from regional states.”
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