Baden-Wuerttemberg CPI

July: +0.2% m/m, +1.3% y/y
June: +0.1% m/m, +1.0% y/y
—
Pan-German CPI

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

June: +0.1% m/m, +0.9% y/y

—

BERLIN (MNI) – Consumer prices in the western German state of
Baden-Wuerttemberg rose by 0.2% in July, lifting the annual rate to
+1.3% from +1.0% in June, the state statistics office said Wednesday.

The monthly rise was below the +0.3% median forecast for pan-German
CPI in a MNI survey of analysts. Earlier today, both North
Rhine-Westphalia and Saxony also reported monthly CPI rates of +0.2%,
while Brandenburg and Hesse posted rates of +0.3%.

Due to the start of the holiday period in Baden-Wuerttemberg,
prices for packaged holiday tours rose a marked 13.9% on the month.
Hotel and restaurant services were up 2.7%.

Downward pressure on monthly consumer prices came from food (-0.2%)
with seasonal food prices falling 0.9%. On the energy side, heating oil
prices dropped 3.5%, motor fuel prices were down 1.4%. and prices for
household energy fell 0.5%

Downward pressure was also exerted by prices for clothing and
shoes, which fell 3.5% on the month.

In an annual comparison, food prices climbed 1.9% with seasonal
food up 8.4%. Heating oil prices rose 28.0%, motor fuel prices climbed
11.7%, and prices for household energy were up 1.0%.

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 outright deflation territory. 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.”

For detailed information see data table on MNI MainWire.

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

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