Most states showed weaker year-on-year readings in August relative to July
- Saxony August CPI 0.0% vs +0.4% m/m prior
- Brandenburg August CPI -0.1% vs +0.4% m/m prior
- Bavaria August CPI +0.2% vs +0.4% m/m prior
- Hesse August CPI -0.1% vs +0.4% m/m prior
- North Rhine Westphalia August CPI +0.1% vs +0.3% m/m prior
Of all the releases above, only Bavaria and North Rhine Westphalia saw the year-on-year readings hold steady from July. The others had a more prominent trend where the figures were weaker and they were weighed down by one particular price area - clothing and shoes.
Education also showed a stark drop in all state readings but the weighting for that is a minor one, though it surely did play a part. Anyway, that shows that there could be a distinct one-off factor that is dragging down inflation this month.
The national headline reading is expected to hold steady at +2.0% y/y but given the skew we are seeing for most states, it is likely the reading will be a tad softer. But as mentioned above, it's not entirely a sign that inflation is slowing down but this appears to be more of a one-off decline more than anything else.
Saxony
Brandenburg