Germany: Harmonized inflation falls more than expected but remains above target in February
Latest reading: Harmonized inflation eased to 2.6% in February from January’s 2.8%. The reading surprised most market analysts slightly to the downside, but outpaced both the ECB’s 2.0% target and the Euro area average of 2.3%. Looking at the details of the release, softer price pressures for transport outweighed a faster rise in food and housing costs.
Still, the trend was unchanged, with annual average harmonized inflation coming in at January’s 2.5% in February. Meanwhile, consumer price inflation was steady at January’s 2.3% in February.
Lastly, harmonized consumer prices rose 0.46% over the previous month in February, swinging from the 0.23% drop seen in January.
Panelist insight: ING’s Carsten Brzeski commented:
“There will be two opposing trends determining the future path of inflation. On the one hand, the cooling of the labour market should take away wage pressures and consequently also inflationary pressure, while on the other hand, the delayed pass-through of higher services costs is still in full swing. At the same time, the recent increase in selling-price expectations in industry is also concerning and could be aggravated by upcoming European tariffs.”