The Bundesbank's estimate of seasonally-adjusted January CPI released this afternoon shows further progress on manufactured goods disinflation, but a 2nd consecutive sequential uptick in services inflation.

• Overall core inflation (CPI ex-energy/food) increased to 0.35% M/M (4.33% annualized, and the second consecutive incline), up from 0.18% M/M in December.
• Services inflation drove the acceleration, coming in at 0.54% M/M (vs 0.18% in Dec), above the trailing 12 month average of 0.28%, and the highest since November 2022. However, the increase will have been at least partly due to January's restaurant VAT increase.
• Conversely, manufactured goods ex-energy/food inflation came in softer at 0.09% M/M (vs 0.17% in Dec), the slowest pace since August 2021.
• Given the impact of the VAT increase, February's data will provide a better signal as to what extent elevated services inflation is due to general stickiness.

MNI, Destatis