Flash Apr HICP: -0.1% m/m, +1.0% y/y

MNI median forecast: +0.2% m/m, +1.3% y/y
MNI forecast range: +0.1% to +0.3% m/m

Flash Apr CPI: -0.1% m/m, +1.0% y/y

MNI median forecast: +0.2% m/m, +1.2% y/y
MNI forecast range: -0.1% to +0.2% m/m

Final Mar HICP: +0.6% m/m, +1.2% y/y
Final Mar CPI: +0.5% m/m, +1.1% y/y

FRANKFURT (MNI) – Consumer prices in Germany surprised to the
downside in April, falling 0.1% both in national and EU harmonized
terms on the month, resulting in an annual change of +1.0% for both
indexes, the Federal Statistical Office reported on Wednesday, citing
preliminary figures.

While a detailed breakdown will not be made available before May
11, releases out of the six largest states highlighted the significant
fall in services, and leisure and entertainment prices, the latter of
which was most likely due to the timing of Easter this year.

Energy costs also played a role, with motor fuel and heating oil
posting the strongest gains on both the month and year, partially
offsetting lower prices in other components.

While the base effects of oil prices are expected to wane in the
coming months, the recent strengthening of crude costs is likely to
delay this.

Households polled in the latest GfK consumer sentiment report
highlighted that, despite a more optimistic outlook for both the economy
and their own financial situations, rising oil prices were lifting
overall price expectations, thus hindering the propensity to spend.

According to the research group’s confidence indicator, households’
desire to buy declined April, adding to March’s modest slide.

Other commodity prices, especially food, are also expected to lift
consumer prices over the medium term, due to growing demand from
emerging economies, the International Monetary Fund said in its latest
World Economic Outlook report.

Nevertheless, government inflation forecasts point to moderate
price growth in Germany. Currently, the national consumer price index is
expected to average a growth rate of 1.3% in 2010 before accelerating
slightly to +1.4% next year.

Forecasts out of various economic institutes, as well as the IMF,
also suggest moderate gains in consumer prices over this year and the

Germany’s leading economic institutes and the Fund forecast German
annual average harmonised inflation of +0.9% and +1.0% this year and
next. DIW forecasts for 2010 were similar. However, prices are expected
to jump 1.3% over 2011, according to DIW, mainly driven by energy and
commodity prices.

— Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com

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