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    Germany’s final August CPI rose 2.2% compared to last year, with core inflation at 2.7%

    by VT Markets
    /
    Sep 12, 2025
    Germany’s consumer price index (CPI) for August stayed at 2.2% compared to last year, according to Destatis on September 12, 2025. The harmonised index of consumer prices (HICP) also remained at 2.1% from the preliminary figure. Before this, the CPI was at 2.0%, and the HICP was at 1.8%. Core annual inflation is currently at 2.7%, matching the European Central Bank’s neutral policy.

    German Inflation Trends

    The inflation data from August 2025 shows that price pressures are easing but are still persistent. With headline inflation at 2.2% and core inflation at 2.7%, it seems unlikely that the European Central Bank will cut interest rates soon. This supports the view that the ECB will maintain its current stance for the rest of the year. For interest rate traders, this means lower volatility in the upcoming weeks. A steady ECB policy suggests that the front end of the yield curve will remain stable, making strategies like selling straddles on short-term EURIBOR futures more appealing. We observed a similar situation in late 2023 when the market began anticipating a prolonged pause in policy. In the currency market, this news may keep the Euro down, especially against the US dollar. Last week, US job data surprised with an addition of 210,000 jobs, strengthening the Federal Reserve’s hawkish position compared to the ECB’s inaction. This difference in policy is likely to limit any major rallies in the EUR/USD pair.

    Equity Market and Economic Indicators

    From an equity standpoint, a stable central bank is usually a good sign, but the reason for this pause is weak economic growth. The latest Eurozone Manufacturing PMI for August dropped to 48.5, indicating a decline in industrial activity for the third month in a row. This suggests that while a rate cut isn’t on the horizon, the economic challenges may limit gains for indices such as the German DAX. Create your live VT Markets account and start trading now.

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