THE TAKEAWAY: German inflation confirmed at 2.1% in December -> Consumer prices rise 2.0% on average from 2011 to 2012 -> Euro trading steady
German annual inflation has returned to a ten month high according to a final estimate of December’s consumer price index. The CPI was confirmed at 2.1% higher than December 2011, higher than the 1.9% annual inflation reported in November. Consumer prices were reported 0.9% higher on a monthly basis, according to the Federal Statistical Office.
The average inflation for Germany in 2012 was reported at 2.0%, largely driven by a 5.7% annual increase in the price of energy products. Food and non-alcoholic beverages saw a 3.2% average increase in prices over 2012.
The rise in German inflation follows an estimate of Euro-zone inflation at 2.2% in December. Higher inflation discourages the ECB from cutting interest rates, and could therefore be seen as Euro positive.
However, the single currency did not react significantly to the as-estimated German inflation. The Euro is currently trading around 1.3350 against the US Dollar in currency markets. EURUSD rose above 1.3400 for the first time in ten months yesterday, and could continue to see resistance by the key figure. Support could be provided by a broken resistance around 1.3284.
EURUSD Daily: January 15, 2013