Preliminary Data Points to Lower Inflation in Germany

Annual inflation in Europe’s largest economy likely slowed in May, data from German states suggested on Monday, probably pushing down the broader euro zone rate and raising pressure on the European Central Bank to act when it meets this week.

Data from six states showed annual inflation rates ranging from 0.6 percent to 1.1 percent. Economists had forecast that the preliminary national rate, due out at 2 p.m. (8 a.m. EDT), would show consumer prices climbed by 1.1 percent on the year.

In North Rhine-Westphalia (NRW), Germany’s most populous state and traditionally a bellwether for the national data, consumer prices increased by 1.1. percent on the year, their lowest annual rate since Sept. 2010.

But ING economist Carsten Brzeski said data from some other states showing weaker inflation would probably push the national figure down below 1 percent.

“It shows euro zone inflation could be weaker than expected, increasing pressure on the ECB to act on Thursday,” he said.

Euro zone inflation stood at 0.7 percent in April – well below the ECB target of close to but just below 2 percent – and a Reuters poll shows economists expect data due out on Tuesday to show it held steady in May.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza