Softer German inflation won’t move the ECB

At first glance, the German December inflation release (prelim) was a big surprise to the downside, coming in at 8.6% vs 9% expected and down from 10% in November. Breaking this down, the fall was all from energy and goods components. That’s good news for energy bills and indicates that supply chain bottlenecks are improving. But the services component, a better indication of wage inflation, actually moved up to 3.9% from 3.6% in November. The hawks will care more about that than the drop in headline, so I don’t take any comfort, or draw any ECB conclusions, from the inflation surprise today.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Gareth Jandrell

Job Title: Fund Manager

Specialist Subjects: Corporate bonds and derivatives

Likes: Mountain sports, ultra-marathons, being a technology geek

Heroes: Richard Sharpe, Ron Swanson, Jasmin Paris

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