Women carrying KaDeWe shopping bags walk past the entrance of the Kaufhaus des Westens department store.
Jörg Carstensen | Image Alliance | Getty Images
Preliminary data released by the German statistics office Destatis on Thursday showed that Germany’s unified consumer price index fell back to 2% in August, lower than analysts’ expectations.
A Reuters poll forecast the consumer price index (CPI) to be 2.3%. In July, the unified CPI increased by 2.6% year-on-year.
On a monthly basis, unified CPI fell 0.2%.
Inflation data for the euro area and EU are consistent to ensure comparability.
Core inflation, which excludes energy and food costs, was 2.8%, down slightly from 2.9% in July. Destatis data showed energy costs fell 5.1% year-over-year in August.
Earlier Thursday, several major German states reported an easing in inflation. The data comes a day ahead of euro zone inflation data, which will be closely watched by investors for clues on the prospects for an imminent rate cut by the European Central Bank.
After the central bank kept interest rates steady in July, questions have lingered about a potential rate cut in September. In June it lowered interest rates.
Carsten Brzeski, global head of macro at ING Research, said in a report on Thursday that “if tomorrow’s euro zone inflation data is confirmed, today’s German data should give the ECB a boost in September.” It is easier to make a decision to cut interest rates at a meeting.
“Ebbing inflationary pressures combined with weakening growth momentum provide a near-perfect macro backdrop for another rate cut.”
However, Brzeski noted that forward-looking inflation indicators, including wage growth and sales price expectations, point to caution.
