In Germany, the CPI inflation was 3.7 percent y/y in December compared to 3.2 percent in the previous month. The reading was consistent with the consensus. The trend of falling inflation on a year-over-year basis has stopped. On a monthly basis, we observe a price increase of 0.1 percent. The higher reading in December can be attributed to energy prices. Meanwhile, core inflation has been falling for another month and is already below the broad CPI. In December, it was 3.5 percent y/y compared to 3.8 percent a month earlier.
This reading does not significantly alter the context of the ECB’s actions. Future monetary policy will be determined by subsequent incoming data from euro zone economies. The ECB is still in pause mode and is partially cooling expectations for quick interest rate cuts.
Bartosz Wałecki, Analyst, Michael / Ström Dom Maklerski
