German inflation likely to have accelerated to 2 pct year-on-year in January, says Societe Generale

Germany’s inflation gauged by the consumer price index and HICP both are likely to have accelerated in January. In the prior month, HICP inflation had risen by one full percentage point. According to a Societe Generale research report, the HICP inflation is expected to have continued improving, but at a slower rate in January, rising by three-tenths to 2 percent year-on-year. This would be its highest print in four years.

The consumer price inflation is also expected to have accelerated by the same amount to 2 percent year-on-year. Energy base effects are expected to have driven inflation higher, whereas food prices are expected to have stayed unchanged after rising considerably in the prior month.

Meanwhile, prices paid for services are anticipated to have slipped back marginally in January after recovering in December. On the other hand, non-energy industrial good prices that rose two-tenths in December are expected to have stayed the same.

Germany’s headline inflation is expected to decelerate slightly below the 2 percent mark from March 2017 and average 1.6 percent compared with just 0.4 percent in 2016. The core component is expected to rebound at a more moderate rate from an average of 1.1 percent year-on-year in 2016 to 1.3 percent in 2017, added Societe Generale.