German inflation eases in September across major states

Inflation eased across major German states in September, signalling a potential nationwide decline in Europe’s largest economy, as preliminary data showed.

North Rhine-Westphalia, the most populous state, saw inflation fall to 1.5 per cent year on year from 1.7 per cent in August. Similar drops occurred in Bavaria, Brandenburg, Saxony, Hesse, and Baden-Wuerttemberg.

Economists expect Germany’s harmonised inflation rate to decline to 1.9 per cent in September from 2.0 per cent in August, its lowest level in over three years. LBBW’s senior economist Jens-Oliver Niklasch suggested inflation could rise again later this year but noted the problem has significantly eased.

The figures fuel speculation that the European Central Bank may consider a rate cut as early as October. However, eurozone bond yields edged higher, reflecting mixed investor reactions to potential future ECB monetary easing.