BREAKING: EUR muted after German CPI data

German CPI report for May was released today at 1:00 pm BST. A slew of state-level report released earlier today suggested that reading for the whole of Germany may surprise to the downside today. Downside surprises in Spanish data, released yesterday, and French data, released this morning, support this scenario further.

Actual report confirmed what was suggested by state-level readings - German CPI inflation dropped more than expected in May. CPI slowed from 7.2% YoY to 6.1% YoY, much more than an expected decline to 6.5% YoY. On a monthly basis, prices dropped 0.1% MoM. This was the first negative monthly reading since December 2022.

Germany, CPI inflation for May

• Annual: 6.1% YoY vs 6.5% YoY expected (7.2% YoY previously)
• Monthly: -0.1% MoM vs 0.2% MoM expected (0.4% MoM previously)

German state-level CPI readings for May

• North Rhine Westphalia: 5.7% YoY vs 6.7% YoY previously (revised lower from 6.8%)
• Hesse: 5.9% YoY vs 6.9% YoY previously
• Bavaria: 6.1% YoY vs 7.2% YoY previously
• Brandenburg: 6.3% YoY vs 7.6% YoY previously
• Baden Wuerttemberg: 6.6% YoY vs 7.3% YoY previously
• Saxony: 6.5% YoY vs 7.6% YoY previously

However, as a lower German CPI reading for May was expected following state-level readings and reports from other EMU countries, market reaction has been muted. EURUSD moved slightly higher while German DE30 traded flat following the release.

EURUSD at 15-minute interval. Source: xStation5