Inflation Dives in Germany, But Core CPI Hold Well

Posted Wednesday, April 29, 2020 by
Skerdian Meta • 1 min read

As the coronavirus spread in Europe and the US and the economy shut down, almost all economic indicators dived lower, as we saw the business confidence report earlier today from the Eurozone, which dived to record lows. Crude Oil has crashed down as we know, with the demand for energy products diminishing.

As a result, inflation has also weakened and I was expecting some lower figures from Germany today. The headline CPI (consumer price index) inflation did weaken, but core CPI held up well. Below is the inflation report for every state:


German CPI Inflation Report Released by Destatis – 29 April 2020

  • Saxony April CPI +1.1% vs +1.6% y/y prior
  • March stood at +1.6%
  • CPI +0.4% MoM
  • March stood at +0.1% MoM
  • North Rhine Westphalia April CPI YoY +0.8%
  • March stood at +1.4%
  • Hesse April CPI YoY +0.8% vs
  • March stood at +1.2% YoY
  • Brandenburg CPI +1.2%
  • March stood at +1.4%
  • Bavaria CPI +0.9% YoY
  • March stood at +1.2%
Headline inflation slumps but that owes largely to a drop in energy prices more than anything else. The good news is that the core reading is actually still holding up, seen at +1.9% y/y so that will provide some comfort ahead of the Eurozone release tomorrow. Much like the Saxony report, the inflation readings here are much softer and just reaffirms that headline annual inflation is going to be a drag amid weaker energy prices and the virus outbreak impact over the coming months.
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