Germany: Inflation continues downward trend
February 28, 2013
In February, consumer prices jumped 0.6% over the previous month, according to a preliminary flash estimate released by the Federal Statistics Office (Destatis) on 28 February. The print contrasted the 0.5% drop observed in January.
Despite the monthly jump, annual headline inflation fell from 1.7% in January to 1.5% in February, which marks the lowest level since December 2010. In addition, the reading exceeded market expectations that had inflation slowing to 1.6%. Annual average inflation fell to 1.9% in February (January: 2.0% year-on-year).
Annual HICP inflation (based on the harmonized index of consumer prices) followed suit and declined from 1.9% in January to 1.8% in February, the lowest level since November 2010.
The Bundesbank expects inflation to fall to 1.5% in 2013, before inching up to 1.6% in 2014. Consensus Forecast panellists expect inflation to average 1.8% in 2013, which is unchanged from the previous month's forecast. For 2014, panellists expect inflation to increase to 1.9%.
Author: Ricardo Aceves, Senior Economist