Here are all the state readings released around the same time:
- Bavaria CPI +2.6% vs +2.9% y/y prior
- Saxony CPI +2.7% vs +3.0% y/y prior
- North Rhine Westphalia CPI +2.4% vs +2.7% y/y prior
- Baden Wuerttemberg CPI +2.4% vs +2.6% y/y prior
It's a bit of a change up compared to the preliminary readings for France and Spain earlier in the day. Even the monthly estimates here point to a marginal drop across the board. The breakdown shows monthly inflation falling in Bavaria (-0.2%), Saxony (-0.2%), North Rhine Westphalia (-0.2%), and Baden Wuerttemberg (-0.3%).
Overall, that points to slightly softer headline annual inflation estimates when compared to April. That being said, they still represent a modest jump since the Middle East conflict began. And given the state of things, we are likely to see price pressures continue to stay underpinned going into the summer months.
And as energy price inflation becomes more embedded into other categories, that will risk seeing a further increase in prices in Q3 and even in the months after towards the end of this year. So, just be wary of that.
Circling back to the numbers here, this likely points to the national reading later coming in around 2.6% at the balance. And that will be off the expected 2.9% reading, which was also the April estimate.
If anything, this points to some moderation in energy prices since last month. But in the overall picture, core inflation/prices will still be the main focus for markets and the ECB.
