Final HICP
May: +0.1% m/m, +1.2% y/y (unrevised)
April: -0.1% m/m, +1.0% y/y

Final CPI
May: +0.1% m/m, +1.2% y/y (unrevised)
April: -0.1% m/m, +1.0% y/y

FRANKFURT (MNI) – The preliminary estimates of German consumer
price inflation were confirmed for May, as higher leisure and package
holiday prices, as well as costlier energy, more than offset cheaper
food, Federal Statistical Office reported on Thursday.

On the month, the consumer price index rose 0.1% in both national
and EU harmonized terms, leaving the annual rate for both indexes at
+1.2%, as expected.

Despite the 0.5% monthly jump in household energy costs, boosted in
large part by heating oil (+1.6%), cheaper motor fuel (-0.1%) negated
energy’s impact, leaving CPI ex-energy up 0.1% on the month, in line
with the overall growth rate.

On the year, however, energy continued to boost inflation figures.
Excluding energy costs, the annual growth rate was 0.4 percentage point
lower, at +0.8%.

While oil prices have recovered slightly after falling about 20%
from their peak, prices remain lower on average this month. Furthermore,
barring any significant jump in energy prices, base effects from crude’s
sharp price drop in early 2009 are likely to continue fading, thereby
diminishing energy’s upward effect on the overall price index.

However, the depreciated euro, which has come under renewed
pressure due to ongoing fiscal concerns and growing risk aversion, could
at least partially offset weaker energy prices in the short term.

Among the larger components of the price index, the strongest jump
came from leisure and culture costs, which increased 1.0% on the month,
fueled by the 3.5% rise in package holiday package tours. Conversely,
food prices fell 0.7% since April.

The government’s most recent forecasts see inflation averaging 1.3%
this year before edging up to 1.4% in 2011. The Organisation for
Economic Cooperation and Development expects more modest price increases
of 1.0% and 0.8% for 2010 and 2011, respectively.

— Frankfurt bureau: +49 69 720 142; email: —

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