The negative surprise in German inflation returns the eurozone CPI to 2% in October

The negative surprise in German inflation returns the eurozone CPI to 2% in October
The negative surprise in German inflation returns the eurozone CPI to 2% in October

Eurozone inflation has returned to the 2% track in October and much of the blame lies with Germany. The region’s consumer price index (CPI) has passed this month from 1.7% year-on-year in September to 2%. Although the new data continues to comply with the 2% objective set by the European Central Bank (ECB), it is accompanied by less positive details: the underlying indicator (neither energy, nor food, nor alcohol, nor tobacco) remains high 2.7% when even a minimal decline was expected. Another worrying section is once again the services inflation, which repeats reading at a still abrasive 3.9% year-on-year. These data are a warning for an ECB that has just endorsed an aggressive path of rate cuts. The inflation and growth figures released this week move away from the Eurobank’s ‘jumbo’ cut of 50 basis points in December.

The rise of three tenths in the general indicator is known 24 hours after the harmonized CPI of Germany (the one used for Eurostat’s calculation of the eurozone) was a negative surprise with a jump from 1.8% to 2.4% year-on-year. A jump that, in an economy like the German one, the most important in the region, has affected the global data. The increase registered in Belgiumfrom 4.3% to 4.7%.

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