Heads up: Germany September CPI expected to show inflation back above 3%

German inflation will be one of the main economic data points to watch out for in European trading today, with the September reading expected to show a further pick up in price pressures. Here's what markets are looking for: CPI +3.1% y/y expected; Prior +2.9% HICP +3.2% y/y expected; Prior +2.9% The August report already showed inflation accelerating to 2.9%, with energy prices rising 10.5% on the year and doing much of the heavy lifting. The key metric to keep an eye out for though is core CPI, and that was comparatively steadier at 2.4% in August. Overall, another move higher in September would reinforce the narrative that headline inflation pressures are not going away just yet - particularly with elevated energy costs still feeding through. That matters for the ECB, even if policymakers have been reluctant to react mechanically to the energy shock. But more importantly, the read on core inflation will be what provides a better signals for markets and the ECB reaction function. An uptick in core prices could signal that inflation pressures are broadening and that raises the risks of second-round effects, which is what the ECB is placing heavy emphasis on. Before we get the national figure, the state CPI readings will give us an early indication of how things are shaping up. Here's the agenda for today: 0800 GMT - North Rhine Westphalia 0800 GMT - Hesse 0800 GMT - Bavaria 0800 GMT - Baden Wuerttemberg 0800 GMT - Saxony 1200 GMT - Germany national preliminary figures Do note that the releases don't exactly follow the schedule at times and may be released a little earlier or later. For markets, I'd firstly be watching whether the state readings show a broad acceleration across the board rather than an isolated jump in one or two regions. If that is the case, it would make the above 3% national estimates increasingly difficult to dismiss - especially if accompanied by a rise in core inflation. In turn, that will keep the inflation debate firmly alive heading into th