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German Inflation Picks Up

James Boston
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German Inflation Picks Up

The first important clues towards this month’s inflationary changes in the Eurozone have just been made available in the form of Preliminary September price change data out of Germany. The Consumer Price Index (CPI) in the Eurozone’s largest economy is now reading at 0.8% when measured year on year, this lines up with the August final figure of 0.8%, there was no expectation of a change in this rate of price growth this month. The month on month change is 0.0% compared to the fall of -0.1% in August, this was expected to read flat for the month of September.

The Eurozone standardised inflation calculation has also been released in preliminary format for Germany. The year on year Harmonized Index of Consumer Prices (HICP) is now forecast to come in at 0.8% for the month of September compared to the August reading of 0.7% and a market consensus estimate for a pick up to 0.8% price growth. Month on month the HICP is showing 0.0% change compared to an August reading of -0.1% and an expectation that prices would remain at 0.0% in this latest reading.

The European Central Bank’s (ECB) Governing Council will decamp to the Italian city of Naples on Thursday where it will hold it’s regular monetary policy meeting. There is no scope for further rate cuts following last month’s surprise reduction in the key refinance rate. The discussions are going to revolve around the Bank’s on going struggles to get liquidity into the banking system and more importantly onward to the real economy. The ECB will be disappointed with the recent take up of it’s Targeted Long Term Refinance Operation (TLTRO) and may consider what measures it has at it’s disposal to encourage a higher level of subscription to the second round offering due in December. Details of the recent Asset Backed Securities (ABS) program are also expected to be made public by the ECB later this week.

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