The other German state releases around the same time as per the following:
- Hesse CPI +% vs +2.2% y/y prior
- North Rhine Westphalia CPI +2.0% vs +1.9% y/y prior
- Saxony CPI +2.1% vs +1.9% y/y prior
- Baden Wuerttemberg CPI +2.1% vs +1.9% y/y prior
The annual figures here are all higher than seen in December, which fits with estimates for the national reading later. German headline annual inflation is expected to rise to 2.0% to start the year, up from 1.8% previously. Based on the state figures, we should expect that estimate to come in around 2.0% to 2.1% at the balance.
But as always is the case, the key statistic to watch will be the core annual inflation estimate once again. Overall, that was seen at 2.8% in 2025 and the more stubborn price pressures in Europe's largest economy here is still posing some trouble for the ECB.
Services inflation is the main culprit, seen at 3.5% for the year and that is preventing the central bank from fully pursuing a push towards their desired 2% inflation target level.
As such, this will continue to be a key spot to watch in terms of inflation developments for the euro area as it remains the major issue for the ECB in trying to manage policy setting.
