Germany Inflation Misses at 2.6%, Undercutting 25-Basis-Point ECB Hike Bets
Updated
Updated · XTB · May 29
Germany Inflation Misses at 2.6%, Undercutting 25-Basis-Point ECB Hike Bets
7 articles · Updated · XTB · May 29
Germany’s preliminary May CPI rose 2.6% year on year, below the 2.8%-2.9% pace markets had been bracing for ahead of the ECB meeting.
HICP came in at 2.7%, also under expectations, after softer readings from German states signaled weaker headline price pressure than feared.
The miss matters because markets had priced nearly an 85% chance of a 25-basis-point ECB rate increase, with any upside surprise seen as reinforcing further tightening.
Core CPI still accelerated to 2.5% from 2.3%, while broader euro-zone inflation pressure remained elevated in France and Italy amid Iran war-driven fuel costs.
That mix leaves the ECB weighing softer German headline inflation against stickier underlying prices and geopolitical energy risks across the bloc.
With core inflation cooling, is hiking interest rates the right answer for Europe's energy crisis?
As war drives energy prices, can the ECB fight inflation without causing a recession?