Germany January preliminary CPI +1.0% vs +0.7% y/y expected

Latest data released by Destatis - 28 January 2021

• Prior -0.3%
• CPI +0.8% vs +0.4% m/m expected
• Prior +0.5%

• HICP +1.6% vs +0.5% y/y expected
• Prior -0.7%
• HICP 1.4% vs +0.3% m/m expected
• Prior +0.6%

That's an impressive bounce in terms of headline annual inflation and even more so when you look at the EU-harmonised reading. However, this needs to be put into context.

As mentioned earlier here, the bump higher is largely to do with tax changes in the new year and is likely a one-off factor. As such, it is not exactly reflecting the kind of boost in inflation pressures that the ECB wants to see coming to the fore.

Given that, the central bank is likely to brush aside the jump here and so should the market.