German inflation slowed unexpectedly this month, with consumer prices falling an average of 0.1%, versus estimates of holding steady, according to the Financial Times.
The decline brings year on year inflation rate down to 1.5% from 1.8%. Forecasts were expecting a smaller dip to 1.7%.
The disappointing data further complicates the debate surrounding the European Central Bank’s plans to unwind its stimulus policy. Disagreement over the pace of tapering was laid bare last week when ECB governing council member Jens Weidmann publicly rebuked the bank’s decision to forego declaring a clear date to ending their bond-buying program.
This data gives a boost to ECB chief Mario Draghi’s dovish policy prescription and may portend more lackluster data tomorrow.
[German] services inflation dropped from 1.6 per cent to 1.2 per cent, and Pantheon Macroeconomics’ Claus Vistesen said the figures increase the chance that tomorrow’s eurozone-wide data will also disappoint.