German September CPI figure seen heading above 3%

German inflation data is set to be a major focus during European trading hours today, as the September figures are anticipated to reveal a continued acceleration in price growth.

Market forecasts for the data are as follows:

• CPI seen at +3.1% y/y (prior +2.9%)
• HICP seen at +3.2% y/y (prior +2.9%)

The previous month's report had inflation quickening to 2.9%, heavily driven by a 10.5% annual rise in energy costs. The core CPI gauge, which was relatively stable at 2.4% in August, remains the more critical number to watch.

A further increase in September would strengthen the story that underlying price pressures remain stubborn, especially as higher energy costs continue to feed through the economy. This carries significance for the ECB, even though its policymakers have shown caution in reacting automatically to the energy price spike.

The core inflation data will offer a far stronger signal for both market direction and the ECB's potential response. An uptick in core prices would suggest that inflation is broadening, heightening the threat of second-round effects, a scenario the ECB is carefully monitoring.

Ahead of the national release, the state-level CPI readings will offer initial clues on the current trajectory.

Today's publication schedule is as follows:

• 0800 GMT - North Rhine Westphalia
• 0800 GMT - Hesse
• 0800 GMT - Bavaria
• 0800 GMT - Baden Wuerttemberg
• 0800 GMT - Saxony
• 1200 GMT - Germany national preliminary figures

The release times are not always exact and figures may be published slightly ahead of or behind the planned schedule.

For market participants, a key factor to monitor is whether the state data reveals a widespread acceleration rather than isolated spikes. If a broad-based increase is confirmed, the likelihood of national figures exceeding 3% becomes much harder to ignore, particularly if core inflation also ticks higher. This outcome would ensure the inflation debate remains highly active as the ECB enters its last few policy meetings of the year.