Flash August German HICP inflation to print at 0.1% yoy

Flash German HICP is expected to remain unchanged at 0.1% yoy in August. In terms of the details, noticeable weakness in energy prices are expected to continue to exert downward pressure on the headline component while the core component is likely to be supported by seasonal variations (up from 0.9% yoy to 1.1% yoy). In the month of July, Germany's HICP inflation remained unchanged at 0.1% yoy while the national measure slowed one tick to 0.2% yoy. The energy component fell from -5.9% yoy in June to -6.2% yoy (cutting 3bp) while a more considerable drop was observed in the rate of food price increases, which fell from 1.0% yoy in June to 0.4% yoy (cutting 5bp) in July. 

On the core details, the services component recovered to 1.1% yoy in July (adding 10bp), driven by an increase in net rents exclusive of heating expenses, road passenger transport, hairdresser services and other services for personal care and catering services in restaurants and cafes. Prices of goods remained unchanged at 0.7% yoy in July. 

"We expect German HICP inflation to average 0.3% in 2015 and 1.5% in 2016, while the core metric should average 1.1% in 2015 and 1.4% in 2016", says Societe Generale.