German February CPI misses forecasts

The cost of living in Germany rose less quickly than expected in February as gains in energy and food prices slowed materially.

According to the Ministry of Finance, the rate of gain in Germany's consumer price index slipped from a 1.6% year-on-year clip in January to 1.4% for February, more than the slowdown to 1.5% that economists had predicted.

Yet while goods price inflation ebbed from 1.5% to 1.0%, that of services was steady at 1.6%.

In harmonised terms, CPI was see rising at a 0.5% month-on-month clip or by 1.2% on the year (consensus: 1.3%), down from a pace of 1.4% in the month before.

Commenting on the data, economists at Barclays Research said: "We continue to expect 'flash' euro area headline inflation will ease (out tomorrow) to 1.2% from 1.3% previously, and we expect core inflation to remain unchanged at 1.0%. Underpinning our forecast is the expectation that France will edge up 0.1pp to 1.6% (previous and consensus: 1.5%; Wednesday) and Italy will decline to 0.8% from 1.2% previously (consensus: 1.0%; Wednesday).

"We also continue to think that risks surrounding our core inflation forecast remain tilted to the downside."