German Inflation Is not Helping the Euro

Posted Monday, January 30, 2017 by
Skerdian Meta • 1 min read

The German regional inflation numbers are being released and they look a bit strange, to say the least. The monthly numbers show a decline in most regions, with prices declining by 0.6% and 0.8%, respectively, in Bavaria and North Rhine against the expectations for a 0.7% increase.

The yearly numbers show another story, though. The yearly inflation jumped by 4 points in three out of six regions with Baden-Wuerttemberg still to come, while inflation figures in the other two regions remained unchanged.

Leaving out the monthly inflation numbers, which have obviously been skewed by seasonal patterns (Christmas holidays), the rest looks pretty great and I bet there are many people feeling a cold sweat in Germany.

Germans hate inflation and the ECB just don't care about it right now. Only a couple of weeks ago, the EB president, Draghi, dismissed whatever inflation we have seen in the Eurozone during the last several months. So if the ECB says there is no inflation when there actually is, then EZ inflation just doesn´t care right now, does it? 

EUR/USD is not feeling particularly happy with the inflation numbers. 

Inflation in itself doesn´t say anything, unless the central bank is willing to keep it under control by hiking interest rates as well as by pulling cash out of the monetary system (buying bonds). So, the Euro is not feeling excited by the German inflation report at all. 

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