Core German CPI inflation muted in August, analysts say

If sustained, a rising euro will help offset price pressures from stronger growth in the euro area's largest economy, some analysts say, with implications for the European Central Bank's decision-making.

On the basis of regional consumer price readings for August released earlier on Wednesday, headline German CPI at the national level looked to have accelerated to a 1.7% pace from 1.5% in the month before, Capital Economics said in a research note sent to clients.

That would be line with economists' projections.

However, at the 'core' level, which strips out the more volatile food and energy components, the rate of advance in consumer prices likely remained at July's level of 1.5%, with gains in cloting and transportation compensated by declines in leisure and package holiday prices, the analysts said.

"The core rate might rise further given the continued strength of German GDP growth and the fact that the economy is already operating at around capacity. But some of the pressure on inflation will be offset by the recent rise in the euro exchange rate if it is sustained.

"And with price pressures still very subdued elsewhere in the euro-zone, the ECB looks set to taper its asset purchases only slowly next year and put off raising interest rates until 2019."