According to the preliminary estimate, German HICP inflation rose from 2.5% Y/Y to 2.8% Y/Y in September, hitting a three-year high, while the consensus was looking for a more moderate increase, to 2.6% Y/Y. Part of the increase in the annual figure was due to last year’s 0.2% M/M decline falling out of the calculation. On a monthly basis, Germany CPI rose by 0.1% M/M. Lower prices for seasonal food, leisure and entertainment and hotels and restaurants, after the holidays, were more than offset by higher prices for clothing & footwear, household energy and transportation. The sharp increase in the annual inflation level was quite surprising, and partly due to special factors as higher prices for clothing and footwear after the sales period. We continue to believe that inflation should trend lowing in the coming months as oil prices have dropped somewhat and growth is easing significantly.