Flash Jul HICP: +0.4% m/m, +2.0% y/y

MNI median forecast: +0.4% m/m, +1.9% y/y
MNI forecast range: +0.2% to +0.6% m/m

Final Jun HICP: -0.2% m/m, +2.0% y/y
————–
Flash Jul CPI: +0.4% m/m, +1.7% y/y

MNI median forecast: +0.4% m/m, +1.7% y/y
MNI forecast range: +0.2% to +0.6% m/m

Final Jun CPI: -0.1% m/m, +1.7% y/y
————–

BERLIN (MNI) – German consumer prices rose 0.4% in July in both
national terms and EU-harmonized terms, leaving annual inflation rates
steady at +1.7% for CPI and +2.0% for HICP, the Federal Statistical
Office (FSO) estimated Friday.

While the monthly increase and the annual CPI rate were in line
with the median forecasts in a MNI survey of analysts, the annual HICP
was slightly higher.

As usual, the FSO provided few details with the flash release. It
pointed to data from reporting states which showed that price
developments in July were mainly caused by seasonal factors. During the
holiday period, prices for package tours and vacation apartments rose.

Furthermore, prices for motor fuel and heating oil were on the
rise, the FSO noted. Downward pressure on inflation came from food and
vegetables as well as clothing and shoes.

Pointing to easing commodity prices due to moderating global
economic growth, the Finance Ministry said last week that “there is no
inflation risk at the moment for Germany from current price developments
on global markets.”

Import prices fell for the third consecutive month in June on the
back of ever cheaper energy products. The 1.5% monthly fall knocked
import prices down to their lowest level for the year and the annual
rate to +1.3%, its slowest pace since December 2009.

Modest global economic growth and demand are likely to limit oil
price gains in the coming months, according to the International Energy
Agency. Yet prices could still remain high in absolute terms due to
ongoing supply-side risks and potential emerging market demand, the IEA
warned.

The uncertainty surrounding economic developments in general and
inflation in particular in Germany and elsewhere are posing significant
challenges for monetary policy, the Bundesbank said in its latest
monthly report released Monday.

“The crisis in the Eurozone is dampening the German economy more
heavily than previously expected,” the DIW economic research institute
warned earlier this month, adding, though, that a recession was not
expected.

German business confidence eroded more than generally expected in
July to its lowest level since early 2010, as firms adjusted downward
their assessment of both the current situation and the near-term
outlook, the Ifo institute reported on Wednesday.

European Central Bank president Mario Draghi said earlier this
month that the Eurozone “inflation path is moving favourably” towards
the ECB’s medium-term inflation goal of close to but below 2%.

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

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