German inflation to rise by 1.9% y-o-y - Rabobank

Bas van Geffen, Quantitative Analyst at Rabobank, notes that this morning, Spanish inflation came in at 2.1%, while the consensus expects German inflation to rise by 1.9% y-o-y.

Key Quotes

“German (national) inflation reached 2.2% in February, its highest level since August 2012. Especially in the last few months, German inflation has accelerated sharply on the back of higher prices for energy, transport and food. However, the contribution of these factors to inflation looks set to wane from here onwards even as core inflationary pressures (which are likely to be more persistent) appear to have increased slightly.”

“The price of oil has declined substantially since the beginning of March. Despite the OPEC agreeing on production cuts, supply from US producers continues to depress prices. With an easing base effect and a significant fall in global commodity prices (especially when measured in EUR) between mid-February and mid-March of this year, we would not be surprised if German headline inflation for March fell to 1.9% (both for the national and harmonized measure). This would be in line with the consensus estimate, but it would also signal that German inflation has peaked for the time being.”