In the following months, Germany’s employment outlook is expected to decline, according to Societe Generale. In the beginning of 2016, employment’s outlook was disturbed due to the market turmoil, while German labor force grew rapidly because of migration. Meanwhile, German flash HICP is likely to have decelerated in April into negative territory again after rising to 0.1% y/y in March, said Societe Generale. Flash HICP inflation for April is expected to have reached -0.2% y/y.
The slowdown in inflation is mainly because of services inflation that has likely weakened as the impact of Easter fades away. The energy component is expected to have declined lesser on an annual basis due to slight rebound in energy prices. Food prices are expected to have been stable. Meanwhile, amongst core components, services inflation is expected to have slowed considerably, while non-energy industrial goods prices are expected to have remained stable, noted Societe Generale.
“We expect German HICP inflation to average 0.5% in 2016 and 1.8% in 2017, while the core metric should average 1.2% in 2016 and 1.4% in 2017”, added Societe Generale.
