Home » Currency Note » Currency Note » Currency Note EUR » EUR: German inflation rate drops to an eight-month low

The headline release from the eurozone yesterday was the German inflation rate for December 2018. The figures showed inflation dropped to 1.7% from 2.3% the previous month, which was in line with expectations. It is the lowest rate of inflation for eight months and was largely brought about by energy and food prices rising at a softer pace. Services inflation remained steady.

Euro movements against sterling and the dollar were fairly muted, with the potential sterling collapse not occurring. It is worth bearing in mind that a no-deal Brexit is bad for the eurozone as well as the UK, so if the UK were to leave without a deal, it is likely that the movements against the dollar would be more pronounced. Investors appear to be waiting to see what happens next before making their moves.

Today is reasonably busy for the eurozone, with inflation for December and November’s construction output. The latter came in at 1.8% last time around and it will be hoped that the sector can post impressive figures, especially in light of the recent disappointments from France, Germany and Italy.

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