German Inflation Rate Confirmed at 2-Year High in October


Consumer prices in Germany rose 0.8 percent year-on-year in October of 2016, compared to a 0.7 percent increase in September and matching preliminary estimates. It was the highest inflation rate since October 2014, as cost of services rose further while energy prices fell at a slower pace.

Year-on-year, energy cost (total) decreased by 1.4 percent, following a 3.6 percent drop in September. Prices were down for: central and distric heating (-7.5 percent), gas (-3.9 percent) and heating oil (-1.4 percent). In contrast, cost of motor fuels rose 0.4 percent. 

Cost of food and non-alcoholic beverages went up 0.3 percent, after gaining 0.5 percent in the previous month. Prices increased for edible fats and oils (+12.2 percent, including butter: +21.7 percent, and olive oil: +11.0 percent, fruit: +2.6  percent) and fish and fish products (+3.8 percent). In contrast, price fell for dairy products (-6.3 percent), including curd: -18.2 percent; cream: -15.5 percent, UHT milk: -15.1 percent and vegetables: -63.6 percent). 

Cost of goods as a whole rose 0.4 percent, following a 0.1 percent drop in the preceding month. Cost of services rose 1.3 percent in  October, the same as in the previous two months. Among goods, higher prices were recorded for pharmaceutical products (+2.3 percent), tobacco products (+3.1 percent) and newspapers and periodicals (+4.0 percent). In contrast, cost declined for consumer electronic (-3.4 percent). Among services, cost went up for: net rents exclusive of heating expenses (+1.4 percent), social facilities (+4.4 percent) and insurance services (+3.1 percent). In contrast, cost dropped for package holidays (-1.6 percent) and telecommunication services (-1.4 percent).

On a monthly basis, price of consumer went up 0.2 percent, after gaining 0.1 percent d in the prior month. It was the highest figure in three months and in line with consensus. Price rose for energy (+1.5 percent, especially heating oil: +11.2 percent and motor fuels: +2.4 percent) and clothing (+0.2 percent). In contrast, cost of holiday packages declined by 3.4 percent. Prices of food nearly remained unchanged (edible fats and oils: +6.7 percent and vegetables: -2.3 percent). 

The harmonized index of consumer prices (HICP) rose 0.7 percent from a year earlier, compared to a 0.5 percent increase in September. On a month-on-month basis, the index was rose 0.2 percent, compared to a flat reading in the preceding month and in line with market expectations.

German Inflation Rate Confirmed at 2-Year High in October


Destatis l Rida Husna | rida@tradingeconomics.com
11/11/2016 7:49:04 AM