It's about time that the base effect adjustment starts kicking in and we are likely to see some of that this month in Germany. Headline annual inflation is estimated to fall to 4.6% in September, helped out by government measures to quell price pressures in the months prior during the same period last year.
This will at least feed into the narrative of the ECB being able to pause rate hikes, with core annual inflation also set to drop further to under 5% I reckon.
That being said, it remains to be seen how much more can these numbers fall. And adding to the concerns for the ECB is that the monthly readings are still expected to show a rise in consumer prices (+0.3% m/m). Amid rising oil prices in the past month or so, that will only add to concerns that inflation might end up being stickier than anticipated.
And that means the ECB would be premature to declare victory too early, the same goes for traders discounting the risks of a rebound in inflation pressures in the months ahead.
Here's the agenda for today:
- 0530 GMT - North Rhine Westphalia
- 0800 GMT - Brandenburg
- 0800 GMT - Hesse
- 0800 GMT - Bavaria
- 0800 GMT - Baden Wuerttemberg
- 0900 GMT - Saxony
- 1200 GMT - Germany national preliminary figures
Do note that the releases don't exactly follow the schedule at times and may be released a little earlier or later.
