German Inflation Figures for December Provides Little EUR Support

It was a quieter day on the Eurozone economic calendar. Finalized December inflation figures for Germany were in focus ahead of the European open.

In December, German consumer prices rose by 0.5%, which was in line with prelim figures. Consumer prices had fallen by 0.2% in the month of November.

According to Destatis,

• In December, the annual rate of inflation picked up from 5.2% to 5.3%, which was in line with forecasts.
• The annual average rate of inflation was 3.1% compared with 2020, which was also in line with forecasts.

Reasons for High Inflation Rate in 2021 on 2020

• A temporary reduction of value added tax rates in the 2^nd half of 2020 and a sharp decline in mineral oil product prices in the previous year reportedly had an upward effect.
• More and more crisis-related effects, such as delivery bottlenecks and marked price increases at upstream stages in the economic process.

Prices of Energy Products up on an Annual Average in 2021

• The prices of energy products were up by 10.4% in 2021 year-on-year.
• In 2020, prices of energy products had fallen by 4.8%.

Other Contributory Factors

• Food prices rose 3.2% in 2021 compared with 2020.
• Prices of goods increased by 4.3%, while service prices increased by just 2.1%.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.13190 before rising to a pre-stat high $1.13364.

In response to today’s stats, the EUR rose to a post-stat and current day high $1.13429 before falling to a post-stat low $1.13291.

At the time of writing, the EUR was up by 0.05% to $1.13323.

Next Up

Housing sector data from the U.S that should have a muted impact on the EUR. ECB member McCaul is scheduled to speak, however, which could draw some interest.