German inflation slows more than expected in October
SPY•German inflation slowed to 2.8% year-on-year in October, below analysts’ 3.1% forecast, as a fuel tax cut helped lower pump prices. Core inflation fell to 2.1% from 2.4% in September.
1. Inflation eases
The EU-harmonised consumer price index rose 2.8% year-on-year in October, down from 3.3% in September. Analysts had forecast 3.1%. Energy price growth slowed to 12.2% from 14.9%, while core inflation, excluding food and energy, fell to 2.1% from 2.4%.
2. Fuel tax reduction
A fuel tax reduction introduced at the start of October and due to remain in place until year-end led to a modest decline in fuel prices. The German data came ahead of a euro zone inflation update due Wednesday; economists polled by Reuters expected inflation in the bloc to rise to 3.9% in October from 3.8% in September. The European Central Bank left interest rates unchanged on Thursday and hinted at another hike in December, warning that high and rising energy costs were fuelling inflation risks.
