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German inflation likely to ease in September, key states indicate

germany

German inflation is likely to ease significantly in September based on data from five key German states on Thursday, signalling what could be the beginning of the end for high inflation that has weighed heavily on Europe’s largest economy.

Inflation in all five states – Bavaria, Baden-Wuerttemberg, Brandenburg, North Rhine-Westphalia and Hesse – fell by at least a percentage point, with Baden-Wuerttemberg recording the largest drop, to 5.1 per cent in September from 7.0 per cent the month before.

The states’ September inflation rates ranged from 4.1 per cent in Bavaria, down from 5.9 per cent the month before, to 5.6 per cent in Brandenburg, down from 7.1 per cent.

The data support a dip in euro zone inflation in September, to 4.5 per cent from 5.2 per cent the month before, that is predicted by analysts polled by Reuters when figures are released on Friday.

Analysts forecast national German inflation in September falling sharply, to 4.5 per cent from 6.4 per cent last month. The statistics office is set to publish national inflation at 1200 GMT.

Price pressures have eased in Europe’s largest economy since last year, when an energy crisis triggered by the Ukraine war pushed inflation up to a decades-long high of 11.6 per cent in October.

However, inflation remains well above the European Central Bank target of 2 per cent and core inflation, excluding volatile prices like food and energy, has been stubbornly high.

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