Falling inflation in German states points to national decline

Inflation fell in six economically important German states in February, preliminary data showed on Thursday, suggesting that German inflation is continuing on its downward trajectory.

The inflation rate in North Rhine-Westphalia, Germany’s most populous state, fell to 2.6 per cent in February from 3.0 per cent in January.

Saxony and Baden-Wuerttemberg saw the largest dips, falling to 3.0 per cent from 3.5 per cent, and to 2.7 per cent from 3.2 per cent, respectively.

Those states were followed by Bavaria, where the rate fell to 2.6 per cent from 2.9 per cent, Brandenburg, with a fall to 3.5 per cent from 3.7 per cent, and then Hesse, at 2.1 per cent from 2.2 per cent the month before.

Economists polled by Reuters forecast Germany’s harmonised inflation at 2.7 per cent in February, down from 3.1 per cent in January.

National inflation data for February is being published by individual eurozone countries before the EU-wide release slated for Friday, which is expected to show headline inflation slowing to 2.5 per cent year-on-year in February from 2.8 per cent in January.

Spanish data on Thursday showed EU-harmonised inflation falling to 2.9 per cent in February from 3.5 per cent, while French data showed inflation rising slightly more than expected, to 3.1 per cent.