German Inflation Set to Overshoot Again as NRW Reports Sharp Price Jump By

© Reuters.

By Geoffrey Smith 

Fxgecko.com -- Inflation in the Eurozone's largest economy is mt4 foreign exchange trader Rankingset to exceed expectations yet again in September after its largest states reported a sharp increase in prices on the month. 

North Rhine-Westphalia, Germany's biggest state by population and GDP, said consumer prices rose by 1.8% on the month alone, pushing the annual rate of inflation up to 10.1%.

The increase was driven largely by rises in the price of transport, as Berlin ended the scheme of so-called 9-Euro tickets that aimed to offer a cheaper alternative to car transport while gasoline and diesel prices soared earlier in the year. Overall, transportation costs rose 9.6% on the month, as fuel prices also resumed their upward movement: retail diesel prices rose 6.8% while gasoline leaped 14%.

Household energy prices also continued to be a major source of pain, with electricity prices rising 6.0% and gas prices 2.7%, as previous increases in wholesale prices were passed on to consumers.

There were also solid increases in food prices, which rose 1.9%, and in clothing, where the arrival of new seasonal collections pushed prices up 5.2%. 

Other big federal states likewise reported numbers that corroborated a trend of 'broadening' inflation, which had earlier this year been more confined to energy-related prices. Bavaria registered a 2.2% increase in prices on the month that pushed the annual rate up to 10.4%, while at the other end of the scale, prices in Hesse rose 'only' 1.4%. Saxony and Brandenburg in eastern Germany both reported a 1.8% increase.

The Federal Statistics Office Destatis is set to publish a preliminary number for Germany at around 08:00 ET (12:00 GMT). Analysts expect an annual rate of 9.4% under the national German method, and 10.0% under the harmonized EU method. The states' numbers are composed under the national one. 

The numbers are likely to increase the pressure on the European Central Bank to keep raising interest rates faster and further than it would like. 

The continued signs of inflationary pressure in Germany contrasted with figures out of Spain earlier, where the annual inflation rate fell by much more than expected to 9.3% (according to the EU method) from 10.5% in August, with prices staying unchanged on the month. Core inflation likewise sank to 6.2%.

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