EUROPEAN INFLATION: German Inflation Breadth Stalls Further in November

German final November HICP was unrevised from the flash readings at 2.4% Y/Y (2.4% prior) and -0.7% M/M (+0.4% prior). The final reading to CPI was also unrevised at 2.2% Y/Y (2.0% prior) and -0.2% M/M (+0.4% prior). Core CPI printed at 3.0% Y/Y (2.9% prior), the same rate as last April.

• Overall, the data confirms the main conclusions from the flash reading - services remained stable on its yearly rate (contribution +0.01pp vs prior) and goods inflation decelerated, driven by energy (contributing +0.18pp vs prior).
• Developments within the services subcategories were mixed, as projected by MNI after state-level data - the standout was recreation and culture, whose -0.05pp contribution vs October was fully driven by package holidays. Details see table.
• Looking ahead, barring an unexpected uptick, lower services momentum of the second half of 2024 opens up the possibility for a declining yearly rate in the category at the beginning of 2025 ('BUBA Estimates Softer M/M German Core & Services CPI' - MNI, Nov 28).
• More generally, at least national CPI is overall expected to tick up towards the beginning of 2025, however.

MNI’s inflation breadth tracker (see chart below) shows disinflation stalling further in the low-inflation categories in November, with the percentage of ECOICOP (European classification of individual consumption according to purpose, a standardized category split) items printing at or below 2% falling to 50.2% from 50.6% in October. In the high-inflation categories, disinflation progressed a little, with the percentage of categories, above 6% falling to 10.7% in November from October's 11.4%.