North-Rhine Westphalia CPI

August: +0.2% m/m, +1.0% y/y
July: +0.2% m/m, +1.1% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +1.1% y/y
MNI forecast range: flat to +0.2% m/m

July: +0.3% m/m, +1.2% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
North-Rhine Westphalia rose 0.2% in August, dampening the annual
inflation rate to 1.0% from +1.1% in July, the state statistics office
said Friday.

The monthly result was slightly above the +0.1% median forecast for
pan-German CPI in an MNI survey of analysts. Earlier today, Saxony
reported a flat reading of monthly CPI.

As in Saxony, downward pressure on monthly inflation came from food
prices, which fell 0.6%, with seasonal produce down 4.8%. Prices for
alcoholic drinks and tobacco products were flat on the month.

Energy price developments were mixed. Electricity rose 0.5% on the
month, gas climbed 0.1%, while motor fuel fell 2.2%. Heating oil prices
were flat on the month.

Prices for packaged holiday tours were 1.3% higher than in July.
Prices for clothing and shoes climbed 2.9%.

In the annual comparison, heating oil prices rose 16.9%,
electricity prices 3.4% and motor fuel prices 4.9%, while gas prices
were down 0.8%. Food prices were 3.8% higher than a year ago, while
prices for clothing and shoes fell 0.2% on the year.

Core inflation also remained tame in August. CPI excluding heating
oil and motor fuel was up 0.3% on the month and 0.7% higher on the year.

Despite the ongoing robust economic upswing, both headline and core
inflation rates are seen remaining low over the coming months. The
remaining slack in the economy is expected to offset any increase in
imported inflation related to the weaker euro.

The Bundesbank asserted in its August Monthly Report that “for the
coming months a continued moderate price increase is to be expected
despite the upward pressure from imports.”

Analysts point out that the pricing-power of businesses remains
weak, as private consumption is not expected to become a major growth
engine in coming quarters. Wage growth in all likelihood will stay
subdued, given that pay deals have been very moderate up to now.

At the eurozone level there are also few inflation risks seen at
the moment.

“We continue to expect price developments to remain moderate over
the policy-relevant medium-term horizon, benefiting from low domestic
price pressures,” European Central Bank President Jean-Claude Trichet
said earlier this month.

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49 30 2262 0580; email: twidder@marketnews.com

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