Flash Jul HICP: +0.3% m/m, +1.2% y/y

MNI median forecast: +0.3% m/m, +1.3% y/y
MNI forecast range: +0.2% to +0.4% m/m

Final Jun HICP: flat m/m, +0.8% y/y
————–
Flash Jul CPI: +0.2% m/m, +1.1% y/y

MNI median forecast: +0.3% m/m, +1.1% y/y
MNI forecast range: flat to +0.4% m/m

Final Jun CPI: +0.1% m/m, +0.9% y/y

————–

BERLIN (MNI) – German consumer prices in July rose 0.2% in national
terms and 0.3% in EU-harmonized terms, with annual rates standing at
+1.1% for CPI and +1.2% for HICP, the Federal Statistical Office (FSO)
estimated Wednesday.

The median forecasts in a MNI survey of analysts were for a 0.3%
monthly rise of both CPI and HICP.

As usual, the Federal Statistics Office provided few details on
price developments with its flash release. It pointed to data from
reporting states which showed that due to the start of the holiday
period, prices for packaged holiday tours and hotel services rose
strongly on the month.

Annual inflation was driven by higher prices for heating oil and
motor fuel as well as by hefty prices hikes in some states for fruits
and vegetables, the FSO said. Downward pressure came again from prices
for gas and central heating.

Both headline and core inflation rates are seen remaining low over
the coming months due to a still-substantial degree of slack in the
German economy.

Moreover, wage growth in all likelihood will stay subdued, given
that pay deals have been very moderate up to now. The pricing power of
businesses is still low in light of weak demand.

At the same time, it is not expected that Germany will be heading
into deflation territory either. The Bundesbank last month forecast
German average inflation of +1.2% this year and +1.6% next year.

ECB Executive Board member Juergen Stark said earlier this month
that there are no deflationary risks in the Eurozone.

“I do not see short-term deflationary risks,” Stark said, noting
that currently only one Eurozone country has negative inflation rates.
Recent money developments also do not point to a deflationary trend
ahead, the ECB’s chief economist observed. “We expect a very gradual
recovery in M3 growth in the months to come.”

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

[TOPICS: M$G$$$,M$X$$$,MAGDS$,M$XDS$,MT$$$$]