Economic Release
DE: CPI
Date: March 31, 2025 07:00 AM CT
| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.4% | 0.4% to 0.4% | 0.3% | 0.4% |
| Year over Year | 2.3% | 2.2% to 2.4% | 2.2% | 2.3% |
| HICP - M/M | 0.4% | 0.5% | ||
| HICP - Y/Y | 2.3% | 2.6% |
Highlights
Year-over-year, Germany's inflation rate in March is estimated to decelerate to 2.2 percent from 2.3 percent the previous month, indicating a continued easing of price pressures compared to the higher inflation peaks of recent years. On a monthly basis, consumer prices rose by 0.3 percent, suggesting a moderate deceleration from the previous month's 0.4 percent rise in inflation. The harmonised index, used for EU-wide comparison, shows a similar deceleration from the previous month with a 2.3 percent annual increase and a 0.4 percent monthly rise.
However, core inflationexcluding volatile food and energy pricesis projected at 2.5 percent, slightly above the headline rate. This suggests underlying price pressures remain persistent, likely driven by services, rent, or other non-energy sectors. While inflation is nearing the European Central Bank's 2 percent target, the stickiness of core inflation could delay policy easing.
In essence, the data shows that headline inflation is gradually aligning with policy targets, but the elevated core figure calls for ongoing monitoring. The latest update takes the German RPI to minus 30 and the RPI-P to minus 22. This means that economic activities are lagging market expectations of the German economy.
However, core inflationexcluding volatile food and energy pricesis projected at 2.5 percent, slightly above the headline rate. This suggests underlying price pressures remain persistent, likely driven by services, rent, or other non-energy sectors. While inflation is nearing the European Central Bank's 2 percent target, the stickiness of core inflation could delay policy easing.
In essence, the data shows that headline inflation is gradually aligning with policy targets, but the elevated core figure calls for ongoing monitoring. The latest update takes the German RPI to minus 30 and the RPI-P to minus 22. This means that economic activities are lagging market expectations of the German economy.
Market Consensus Before Announcement
CPI is seen up 0.4 percent on the month and up 2.3 percent on year.
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.
