German headline inflation accelerates slightly year-on-year in November, euro area core rate likely rose

German inflation pressure continues to be moderate despite solid economic growth. The consumer price inflation rose to 1.8 percent in November, rising from 1.6 percent in October. The rise was mainly driven by higher oil prices, which are making energy more expensive. Keeping the often very volatile prices for energy and food aside, the price rise came in at 1.4 percent year-on-year.

The core pace of inflation was therefore slightly higher than in the previous month; however, this just countered part of its decline seen since the summer. The fluctuations in the core rate could be partially explained with special impacts in package holidays. However, even if these are factored out, not much remains of the uptrend that appeared to emerge in the spring and summer, noted Commerzbank in a research report.

“The German numbers and Spanish consumer price data, which was also released today, lead us to expect that the core rate of inflation in the euro zone has moved up from 0.9 percent to 1.0 percent at most, which would compensate for only part of the decline in October”, added Commerzbank.

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