Eurozone Inflation Signals Ahead
🇩🇪 Germany CPI Preview: Headline Inflation Expected to Rise 2.1% YoY in August
Germany’s Federal Statistical Office (Destatis) is set to release preliminary inflation data for August on Friday at 12:00 GMT. Market expectations point to a slight uptick in headline Consumer Price Index (CPI) inflation, rising 2.1% year-over-year (YoY), compared to 2.0% in July.
📈 German inflation figures are closely watched as a leading indicator for Eurozone-wide trends and play a pivotal role in shaping expectations around the European Central Bank’s (ECB) monetary policy decisions. The ECB’s inflation target remains at 2.0%.
Analysts at TD Securities note:
“July’s print surprised to the downside due to a rounding effect at 1.845%. We expect August to start climbing back toward target as energy deflation moderates due to base effects and increases in gas and electricity prices.”
They added:
“Services should also reverse the July weakness. This should alleviate concerns of a persistent inflation undershoot in the euro area's largest economy.”
📍 Regional Indicators North Rhine-Westphalia (NRW), Germany’s most populous state, typically releases its inflation data ahead of the national figures. While NRW’s numbers often hint at broader trends, they are not always reliable as forward-looking indicators.
Spain is also scheduled to publish its national inflation data on Friday, offering additional clues about the trajectory of Eurozone-wide HICP inflation.
At the ECB’s July press conference, President Christine Lagarde stated:
“Risks to economic growth remain tilted to the downside,” and “the outlook for euro area inflation is more uncertain than usual.”
Speaking at the Jackson Hole Symposium last week, Lagarde remarked:
“Europe’s labor market has performed far better than expected, despite soaring inflation and steep interest-rate hikes in recent years.”
With the ECB widely expected to pause rate cuts in September, the upcoming German and Eurozone inflation reports will be instrumental in determining whether easing resumes later this year.