Final HICP

May: -0.2% m/m, +2.2% y/y (revised from -0.3% m/m, +2.1% y/y)
April: +0.1% m/m, +2.2% y/y

Final CPI

May: -0.2% m/m, +1.9% y/y (unrevised)
April: +0.2% m/m, +2.1% y/y

FRANKFURT (MNI) – EU-harmonized consumer price inflation in Germany
was revised upwards in May, suggesting a similar rewrite for the
Eurozone figure, the Federal Statistical Office reported on Wednesday.

With HICP down 0.2% on the month, revised from -0.3%, the annual
rise came to 2.2%, also 0.1 percentage point higher than the flash
estimate.

In national CPI terms, prices were confirmed 0.2% lower on the
month and 1.9% higher on the year..

As Brent crude prices continued to trend downwards, motor fuel was
3.3% cheaper in May to give an annual rise of 3.4%. Transport prices
were up 2.0% on the year.

Weighed by the 2.8% fall in heating oil prices, household energy
was 0.3% cheaper than in April to give an annual rise of 5.8%.

Core CPI, which excludes both motor fuel and household energy, was
flat on the month and up 1.5% on the year.

A slowing global economy and ongoing uncertainty regarding the
Eurozone debt crisis brought Brent crude to a 16-month low of 98.12
before the commodity parred back some losses.

Sliding oil prices might prompt a cut in OPEC oil production.
However, Brent could remain close to current prices in the short term,
as Saudi Arabia pushes to keep the oil price at close to $100 ahead of
the oil cartel’s meeting in Vienna later this week.

Food and non-alcoholic beverage prices were unchanged between April
and May, resulting in an annual rise of 2.5%.

With household energy costs down, apartment and utility prices were
flat on the month and up 2.3% on the year.

May’s PMI polls signaled a pick-up in German input price inflation
on the back of fuel and labour costs, while output prices rose at their
fastest pace in nearly a year, in contrast to declines in other
countries.

Yet companies appear hesitant to raise prices in the short term. An
Ifo survey showed selling-price expectations in manufacturing and
construction falling to four-month lows in May. Wholesale sector price
expectations fell faster to the lowest level since February 2010.

Households’ inflation expectations also eased last month, which
helped underpin consumer sentiment, the GfK Group reported.

With selling-price expectations across the Eurozone falling further
below the long-run average, consumers revising down their near-term
price outlook, and risks to EMU economic growth on the downside,
expectations of a rate cut by the European Central Bank are growing.

ECB President Mario Draghi fueled those expectations last week when
he said some Council members “would have preferred” a rate cut this
month.

However, recent comments from one Bundesbank board member suggest
that such a move could encounter resistance. “Our policy stance remains
rather accommodative,” Andreas Dombret said Tuesday. “In effect,
monetary policy is more expansive than the key interest rate of 1% might
suggest.”

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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