The softer French and Spanish inflation numbers from last week have only served to rebuff market expectations for an ECB rate cut in October. And if things play out accordingly today, the German inflation numbers will reaffirm those odds. The estimate is for headline annual inflation to ease further to 1.7%, down from 1.9% in August.
That being said, core annual inflation remains a little on the higher side in Germany. The latest reading last month was at 2.8%, so that's still a key sticking point for the ECB. The trend is still for it to keep nudging lower, albeit at a reduced pace heading into the latter months this year. The same goes for headline annual inflation, which policymakers are expecting base effects to drive a more bumpy path.
As things stand, traders are pricing in ~93% odds (futures pricing) of an ECB rate cut next month already now. Barring any surprises from the data, there should not be too much change to that later in the day.
Here's the agenda for today:
- 0800 GMT - North Rhine Westphalia
- 0800 GMT - Hesse
- 0800 GMT - Bavaria
- 0800 GMT - Baden Wuerttemberg
- 0800 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.