If oil prices hold steady around present levels, German consumer price inflation should fall to about 1.3% in December from 2% last month. Year-on-year change in the German consumer price index follows YOY change in the oil price. If oil doesn’t move much, the inflation rate should fall. That’s a point of great political importance as Germany gears up for national elections in September. If inflation were to stay around the 2% mark, German patience with the European Central Bank’s negative interest rates would disappear. If inflation falls, Germany will give the ECB a longer leash.
German CPI should fall if oil price remains steady
The drop would be crucial to ease German impatience with the ECB as Germany prepares for elections in September