German inflation seems to have slowed slightly in November, to rise above 1 pct in early 2017

Germany’s HICP inflation and consumer price inflation both are expected to have slowed down fractionally in November. According to a Societe Generale research report, inflation measured by HICP and consumer price index is expected to have slipped to 0.6 percent year-on-year and 0.7 percent year-on-year, respectively.

This slight decline shows the markedly weaker energy component along with a slight decline in core inflation. Energy component is expected to have dropped from -1.4 percent year-on-year in October to -3 percent year-on-year in November. This shows evident weakness in gasoline prices, while prices of food are expected to have increased marginally.

“We see core inflation coming in a bit lower at 1.0 percent yoy compared to 1.1 percent yoy in October”, added Societe Generale.

Germany’s headline inflation is likely to continue to rebound at a more rapid pace, driven by energy base effects around the end of 2016 and early 2017. The consumer price inflation is expected to accelerate above 1 percent in early 2017. Meanwhile, core inflation is anticipated  to accelerate, but at a slower than current pace of around 1.1 percent year on year to just 1.3 percent year-on-year (average) next year, stated Societe Generale.