Germany's February flash HICP inflation is likely to be lower at 0.0% y/y, as compared with January's 0.4% y/y. The slowdown in the headline is expected to be due to continuous weakness in energy prices. In February, it is unlikely to have positive energy-component base effects like January, when positive base effects from the energy component accelerated the headline inflation. Food prices are likely to continue to soften on a yearly basis for the third consecutive month, whereas the core component is expected to at 1.2% y/y in February.
"We expect German HICP inflation to average 0.7% in 2016 and 1.7% in 2017, while the core metric should average 1.3% in 2016 and 1.4% in 2017", says Societe Generale.
