May: +0.6% m/m, +8.5% y/y

MNI survey median: -0.6% m/m, +7.4% y/y
MNI survey range: -0.9% m/m to +0.5% m/m

April: +2.0% m/m, +7.9% y/y
—

FRANKFURT (MNI) – Import prices in Germany surprised to the upside
in May, rising for the eighth consecutive month, with all components
except energy contributing, the Federal Statistical Office reported on
Friday.

On the month, prices rose 0.6%, resulting in an annual increase of
8.5%, the biggest since November 2000.

Factoring out crude oil (-6.6% m/m, +40.7% y/y) and mineral oil
(-1.2% m/m, +45.0% y/y), the core import price index increased at double
the pace of the headline figure (+1.2%), though managed only a +5.5%
rise on the year.

Oil’s upward impact on annual rates should continue to fade as the
base effect of the trough in oil prices in early 2009 works its way out
of the calculation.

Further downward pressure on energy prices could come from an
abundance of supply, as oil and gas markets are forecast to remain
oversupplied until 2015.

“For the next few years, the oil market is marked by more
comfortable spare capacity than envisaged last year, and the duration of
the current gas glut is set to last beyond 2013, at least in some
regions,” the International Energy Agency said Wednesday.

The weak euro could offset this, however, as evidenced by
manufacturers putting part of the blame on the unfavourable euro/dollar
exchange rate for further increases in input prices, June’s purchasing
managers index (PMI) showed.

Prices for other commodities, including food, could also boost
import prices in the long term, both the Organisation for Economic
Cooperation and Development (OECD) and the Food and Agriculture
Organisation said in a recent report.

Imported basic goods prices rose 1.6% since April, leaving the
annual change at +13.0%, while capital goods imports were up 0.4% on the
month, but down 0.4% annually.

Consumer goods imports were also more expensive in May, rising 1.3%
on the month and 2.0% on the year.

Export prices were up 0.5% since April, which boosted the annual
rise to +3.6%, its highest print since October 2000, the statistics
office noted.

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

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