29 Apr 2015
German inflation to continue to increase – ING
FXStreet (Barcelona) - Carsten Brzeski of ING, reviews the German inflation data, noting that prices increased to 0.4% yoy, and will likely continue to climb higher.
Key Quotes
“Based on the results of six federal states, German prices dropped by 0.1% MoM in April, from 0.5% in March. On the year, prices increased by 0.4%, from 0.3% in March. The harmonized European measure of headline inflation, more relevant for ECB policy-making, increased to 0.3% YoY in April, from 0.1% in March.”
“Still low headline inflation, masks two diverging trends. Obviously, the base effects of lower energy prices are still keeping headline inflation low. At the same time, however, lower energy prices, combined with battles for market shares, are also pushing down prices in the other sectors. Particularly, the sectors with strong competition, both domestically and internationally.”
“On the other hand, however, headline inflation in the pure domestic, typically non-tradable, sectors is accelerating. Just think of the health care sector or tourism. Interestingly, even excluding volatile energy prices, increasing and dropping prices seem to net each other out, as core inflation has remained very stable over the last months.”
“Looking ahead, German headline inflation should gradually continue to increase. However, as long as even the largest and strongest Eurozone economy does not show any signs of inflationary over-heating, the ECB will continue QE and hush any tapering discussion.”
Key Quotes
“Based on the results of six federal states, German prices dropped by 0.1% MoM in April, from 0.5% in March. On the year, prices increased by 0.4%, from 0.3% in March. The harmonized European measure of headline inflation, more relevant for ECB policy-making, increased to 0.3% YoY in April, from 0.1% in March.”
“Still low headline inflation, masks two diverging trends. Obviously, the base effects of lower energy prices are still keeping headline inflation low. At the same time, however, lower energy prices, combined with battles for market shares, are also pushing down prices in the other sectors. Particularly, the sectors with strong competition, both domestically and internationally.”
“On the other hand, however, headline inflation in the pure domestic, typically non-tradable, sectors is accelerating. Just think of the health care sector or tourism. Interestingly, even excluding volatile energy prices, increasing and dropping prices seem to net each other out, as core inflation has remained very stable over the last months.”
“Looking ahead, German headline inflation should gradually continue to increase. However, as long as even the largest and strongest Eurozone economy does not show any signs of inflationary over-heating, the ECB will continue QE and hush any tapering discussion.”