Germany: Harmonized inflation stable above the ECB’s target in November
Latest reading: Harmonized inflation held steady at October’s 2.4% in November, outpacing both the Euro area’s 2.2% and the ECB’s 2.0% target but surprising markets on the downside. Looking at the details of the release, rebounding price pressures for transport plus a faster increase in food and housing costs broadly offset a softer rise in recreation and hospitality prices.
Accordingly, annual average harmonized inflation was unchanged at October’s 2.6% in November. Meanwhile, consumer price inflation ticked up to 2.2% in November from October’s 2.0%.
Lastly, harmonized consumer prices fell 0.69% over the previous month in November, contrasting the 0.39% increase seen in October. November’s result marked the sharpest fall in prices since November 2023.
Panelist insight: ING’s Carsten Brzeski commented:
“Looking ahead, the stickiness of inflation at slightly too high a level still looks set to continue as favourable energy base effects will continue petering out while wages are increasing. However, with the current turning of the labour market, wage growth should come down more significantly than previously thought, leading to more disinflationary pressures next year. As a result, we continue to expect inflation to remain within the broad range of between 2% and 2.5% in 2025.”