Inflation in Germany slowed to 2.8% in October. The preliminary estimate was published by the statistics agency Destatis on Friday, October 30. In September, the annual price growth was 3.3%, while the market expected 3.1%.
CPI is the consumer price index. It measures how much the basket of goods and services for the population has risen in price over the year.
For a trader, this is a signal on the euro. Weak inflation reduces the reasons for the ECB to keep rates high, and EUR/USD moved below 1.1200.
What figures are in the report?
- 2.8% - annual CPI versus 3.3% a month earlier.
- 2.8% - harmonized HICP indicator against expectations of 3.1%.
- fell by 0.2% - prices for the month after a rise of 0.6% in September.
- +0.1% - consensus for the monthly indicator.
HICP is the same inflation, but calculated using the European Union's unified methodology so that countries can be compared.
Missing the forecast - by 0.3 percentage points at once for both the month and the year.
Why is this more important than German statistics?
Traders read the German figures as the first benchmark for ECB policy. There are three reasons.
- Size of the economy. Germany is the largest economy in the eurozone.
- Timing of release. The national report is published earlier than the aggregate estimate for the currency bloc.
- Rate logic. The weaker the inflation, the fewer reasons the regulator has to keep rates high.
How did the market react?
EUR/USD slipped after the publication. The pair traded around 1.1170 and settled below 1.1200. By the end of the day, the euro remained in the red.
Key point: there was no sharp collapse, the movement was moderate. But the direction is clear - weak data weaken the euro.
What's next?
- Clarification from Destatis. The estimate is preliminary, and a discrepancy with the first publication does happen.
- Aggregate report for the eurozone. It will gather data for all countries of the bloc and become the next benchmark for the pair.
Publication dates are in the economic calendar. If you trade on data releases, it's worth choosing a challenge to match your style.
Were you holding the euro when the figures came out?
A forecast miss of 0.3 points - and EUR/USD is repriced in seconds while you decide whether you can get in. Some trading programs calmly let you hold a position through a release, others void the result for a trade in the data release window. With others, slippage during those minutes eats up the entire daily drawdown limit. This is written in the rules of a specific challenge, not in general promises about the conditions. Selecting the ones where your style is not prohibited will take a couple of minutes.