Germany's inflation rate experienced an unexpected dip in September, marking the lowest point since the onset of the Ukraine war. This has sparked speculation regarding whether the European Central Bank (ECB) has reached the limit of its rate-hiking cycle after recent rate increases.
The dip in inflation is primarily attributed to a significant drop in energy inflation, which fell to 1.0% from 8.3% in August. This decline is linked to the cessation of government relief packages. Meanwhile, consumer prices rose by 4.5% compared to last year, a decrease from the 6.1% rise observed in August.
While food inflation remained high at 7.5%, it showed a slowdown from August's 9.0%. Similarly, core inflation also saw a decrease, declining to 4.6% from 5.5%.
The report suggests that given these circumstances, the ECB might maintain its key deposit rate at the current level of 4.0%. The recent developments in Germany's inflation and their potential impact on ECB's monetary policy will be closely watched by investors and market analysts alike.
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