Flash Aug HICP: flat m/m, +0.9% y/y

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

Final Jul HICP: +0.3% m/m, +1.2% y/y
————–
Flash Aug CPI: flat m/m, +1.0% y/y

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

Final Jul CPI: +0.3% m/m, +1.2% y/y
————–

BERLIN (MNI) – German consumer prices in August remained overall
flat both in national terms and in EU-harmonized terms, with annual
rates slowing to +1.0% for CPI and +0.9% for HICP, the Federal
Statistical Office (FSO) estimated Friday.

The median forecasts in an MNI survey of analysts were for a CPI
rise of 0.1% m/m and an HICP increase of 0.2% m/m.

As usual, the Federal Statistics Office provided few details on
price developments with its flash release. It noted that price hikes for
heating oil and motor fuel as well as for fruit and vegetables
contributed markedly to annual inflation.

Downward pressure came again from prices for gas, central heating
and long-distance heating, it said.

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.

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

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