German state inflation numbers are weaker than anticipated, with headline CPI rates in the six states that have released numbers already falling by 0.4/0.5 percentage points. This is more than we are looking for in the pan German number, although broadly in line with Bloomberg consensus for a decline in the HICP rate to 1.5% from 2.0% in April, Action Economics said. That headline rates would fall back again after the Easter-fueled jump in April was expected and Spanish numbers, released earlier, already confirmed that.
For European Central Bank president Mario Draghi and Co, the fact that HICP dropped and that forecasts could well be revised slightly down as oil prices remain lower than assumed in March will provide backing for calls to keep changes in the forward guidance to a minimum in June. It shouldn’t be enough, however, to keep the easing bias in place as growth continues to strengthen, Action Economics said.