(Bloomberg) — Inflation sank across six German states in September — suggesting a slowdown in national data due later in the day that will further fuel calls the European Central Bank to cut interest rates in October.
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The rate of consumer-price gains in North Rhine-Westphalia — Germany’s most populous state — fell to 1.5% from 1.7% in August, according to preliminary figures published Monday. In Hesse, it dropped to 1.2% from 1.5%.
The numbers follow readings from France and Spain on Friday that showed plunges below the ECB’s 2% target. Analysts surveyed by Bloomberg see inflation for Germany as a whole coming in at 1.8%, which would be the first sub-2% outcome since February 2021.
An hour after that release, ECB President Christine Lagarde will address European Union lawmakers — her first opportunity to comment on last week’s huge buildup in investor bets for rates to be cut again on Oct. 17. Money markets now price the chance of a move at 80%.
What Bloomberg Economics Says…
“The consensus estimate from a Bloomberg survey sees overall inflation at 1.8% year on year in September, down from 2% in the prior month. Based on the state CPI data, it seems likely the national rate will be broadly in line with this (and our own) forecast. Looking ahead, we see inflation rising a touch in the coming months due to base effects before dropping into 2025.”
—Jamie Rush, chief European economist. Click here for full REACT
For Germany, the Ifo institute said Monday that fewer and fewer companies are looking to raise prices. Its index of price expectations in Europe’s biggest economy dropped to 13.8 points in September, down from 16.1 points, the lowest level since February 2021.
“The economic crisis is reducing the scope for companies to raise their prices,” said Timo Wollmershäuser, Ifo’s head of economic research. “Overall, the inflation rate in Germany in the coming months is likely to remain below the 2%-mark targeted by the ECB.”
–With assistance from Kristian Siedenburg.
(Updates with Bloomberg Economics.)
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