Consumer prices were surprisingly robust in September. A provisional 0.4 percent monthly rise put the annual CPI rate at 2.3 percent, up from a final 2.0 percent in August and its strongest reading since November 2011.
The flash HICP similarly accelerated with also a 0.4 percent monthly increase that boosted its yearly rate by 0.3 percentage points to 2.2 percent.
However, much of the spurt in annual CPI inflation was attributable to the more volatile components. Hence, the rate for food was up 0.3 percentage points at 2.8 percent while energy climbed fully 0.8 percentage points to 7.7 percent. Overall goods inflation increased 0.4 percentage points to 3.1 percent but services edged just a tick firmer to 1.5 percent. Rent, excluding utilities, dipped from 1.5 percent to 1.4 percent.
Still, today's German inflation update suggests that higher wages are beginning to have an impact on consumer prices. To a lesser extent, this effect should also be apparent in tomorrow's flash Eurozone inflation report for which there must now be some upside risk.