Hesse CPI

April: +0.2% m/m, +1.9% y/y
March: +0.2% m/m, +2.0% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +2.0% y/y
MNI forecast range: -0.1% to +0.2% m/m

March: +0.3% m/m, +2.1% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of Hesse
rose 0.2% in April, dampening the annual inflation rate to +1.9% from
+2.0%, the state statistics office said Thursday.

The monthly result is above the median forecast of +0.1% for
pan-German CPI in a MNI survey of analysts.

Monthly energy cost trends were mixed, with motor fuel up 1.0% and
gas and electricity both up 0.1%, while heating oil fell a marked 2.8%.

Food prices rose 0.3% on the month, with seasonal produce also up
0.3%. Clothing and shoes were up 0.2%. Prices for package holiday tours
rose 0.8% on the month. Restaurant and hotel services were up 0.1%.

Annual price developments were again driven by energy price
increases, with motor fuel up 5.5%, gas up 4.6%, heating oil up 4.5% and
electricity up 2.9%.

Food prices climbed 3.7% on the year, with seasonal produce up
0.3%. Alcoholic drinks and tobacco products increased by 4.0%. Clothing
and shoes were up 3.0%. Package holiday tours rose 4.4% and hotel and
restaurant services climbed 3.2%.

CPI excluding heating oil and motor fuel was up 0.2% on the month
and 1.8% higher on the year.

Due to sticky high oil prices, analysts expect annual inflation to
be above 2% over the next months.

Economics Minister Philipp Roesler on Wednesday said there is “no
acute inflation problem” but warned that inflation could become a risk
for the economic upswing. Wage deals this year will likely remain
reasonable, he reckoned.

“The ECB has our support so that it can return to its normal mode
of monetary policy and can concentrate on its clear mandate, assuring
price stability,” Roesler said.

In its updated economic outlook released Wednesday, the government
projected average inflation rates of 2.3% this year and 1.9% next year.

Germany’s leading economic research institutes said last week that
due to rising capacity utilisation rates and increasing tightness of
labor supply, wage and price pressures would increase markedly.

“We don’t see a wage-price spiral yet, but the risk absolutely
exists,” Joachim Scheide, the chief economist of the Kiel-based IfW
institute, said at a press conference on presenting the joint forecasts.
CPI is projected to rise by 2.3% this year and by 2.2% next year.

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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