Jan 4, 2024: Preliminary data revealed an increase in inflation across six economically significant German states in December, indicating a potentially challenging path ahead for German inflation as a whole.
North Rhine-Westphalia, Germany’s most populous state, witnessed a climb in its inflation rate from 3.0% in the previous month to 3.5% in December.
Similarly, in Bavaria, the inflation rate surged from 2.8% in November to 3.4% in December. Brandenburg saw an increase to 4.5% from 4.1%, Saxony rose to 4.3% from 3.9%, Baden-Wuerttemberg climbed to 3.8% from 3.4%, and Hesse escalated to 3.5% from 2.9% in the previous month.
The expected pause in the disinflationary trend towards the end of 2023 is attributed to base effects linked to energy relief measures for gas and district heating implemented in December last year.
According to Reuters polls, economists anticipate Germany’s harmonized inflation to reach 3.8% in December, marking a significant uptick from November’s 2.3%.
Market analysts eagerly await the national inflation data scheduled for release later on Thursday, which precedes the euro zone inflation figures.
European Central Bank President Christine Lagarde had previously highlighted upward risks in inflation as a means to counter immediate considerations for rate cuts.
