| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.0% | 0.0% to 0.0% | 0.0% | 0.0% |
| Year over Year | 1.6% | 1.6% to 1.6% | 1.6% | 1.6% |
| HICP - M/M | -0.1% | -0.1% to -0.1% | -0.1% | -0.1% |
| HICP - Y/Y | 1.8% | 1.8% to 1.8% | 1.8% | 1.8% |
Highlights
The provisional CPI data were unrevised, leaving the yearly inflation rate at 1.6 percent, down from 1.9 percent in August and its lowest reading since February 2021. Prices were unchanged on the month.
The annual increase of the harmonised index of consumer prices was at 1.8 percent, down from 2.0 percent in August and also its weakest print since February 2021. Prices dipped 0.1 percent on the month.
Core CPI inflation, which excludes volatile food and energy prices, was similarly unrevised at 2.7 percent, a tick below its final August mark but still supported by a strong service sector rate (3.8 percent after 3.9 percent).
Today's update puts the German RPI and RPI-P at 11 and 25 respectively, indicating that overall economic activity is moderately outperforming market expectations.
The annual increase of the harmonised index of consumer prices was at 1.8 percent, down from 2.0 percent in August and also its weakest print since February 2021. Prices dipped 0.1 percent on the month.
Core CPI inflation, which excludes volatile food and energy prices, was similarly unrevised at 2.7 percent, a tick below its final August mark but still supported by a strong service sector rate (3.8 percent after 3.9 percent).
Today's update puts the German RPI and RPI-P at 11 and 25 respectively, indicating that overall economic activity is moderately outperforming market expectations.
Market Consensus Before Announcement
No revisions are expected to the preliminary data which showed annual CPI inflation falling from August's final 1.9 percent to 1.6 percent.
Definition
The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. A provisional estimate, with limited detail, is released about two weeks before the final data are reported.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Germany where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, Germany's interest rates are set by the European Central Bank.
Germany like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The preliminary release is based on key state numbers which are released prior to the national estimate. The states include North Rhine-Westphalia, Baden-Wuerttemberg, Saxony, Hesse, Bavaria and Brandenburg. The preliminary estimate of the CPI follows in the same day after the last of the state releases. The data are revised about two weeks after preliminary release.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
Germany like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The preliminary release is based on key state numbers which are released prior to the national estimate. The states include North Rhine-Westphalia, Baden-Wuerttemberg, Saxony, Hesse, Bavaria and Brandenburg. The preliminary estimate of the CPI follows in the same day after the last of the state releases. The data are revised about two weeks after preliminary release.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
