EUROPEAN INFLATION: German HICP/CPI Y/Y Expected To Decelerate By 0.1pp [1/2]

German April inflation is scheduled for 13:00 BST / 14:00 CEST today - however, we will receive state-level data likely amounting to 89.1% of the national basked briefly after 09:00 BST / 10:00 CEST. We will provide analysis on that, drawing signals for the later, national print.

• BBG Consensus (national level):
  • HICP 2.1% Y/Y (vs 2.3% prior); 0.4% M/M
  • CPI 2.0% Y/Y prior (vs 2.2% prior); 0.3% M/M
• Analyst views:
  • Goldman Sachs sees HICP 2.2% headline, 3.1% core. “Services inflation to increase, driven by a notable contribution from travel-related services due to the timing of Easter this year. We expect package holidays to print close to 6%mom nsa, and airfares to come in at 11%mom nsa but see scope for a stronger print.” They expect “unprocessed food inflation to increase to 7.1%, mostly driven by a base effect.”
  • Barclays sees German package holidays at 5.6% Y/Y, accommodation at 2.6% and airfares at 16.0% (all Y/Y). They see NRW headline CPI at 0.38% M/M.
  • Morgan Stanley sees energy CPI/HICP at -5.4% Y/Y “on lower inflation in fuels, as well as electricity and gas” but “core inflation to rise on the positive base effect from Easter” (core CPI at 2.9%, core HICP 3.3%)  
• The Bundesbank highlights in their April monthly report: “The inflation outlook is currently characterised by particular uncertainty. Prices on the energy markets have tended to decline recently, amid high volatility, and the euro has tended to appreciate against the US dollar. Based on the oil price path derived from forward prices and on the US dollar/euro exchange rate as this report went to press, the inflation rate is expected to be even somewhat lower in the near future."
• The April flash PMI noted “a slight uptick in the rate of inflation in average prices charged for goods and services. The acceleration from March’s four-month low was driven by a first – albeit marginal – increase in factory gate charges in almost two years. Services firms continued to display the stronger pricing power, although the latest increase in services output charges was the weakest since last October.”