Final HICP
November: +0.1% m/m +1.6% y/y

Final CPI
November: +0.1% m/m, +1.5% y/y

BERLIN (MNI) – Germany’s harmonized annual inflation rate rose 1.6%
in November, the Federal Statistical Office said Thursday, confirming
its flash estimate.

The stats office also confirmed the flash estimate of the monthly
rise of 0.1%.

Germany’s national CPI was unrevised at +0.1% m/m and +1.5% y/y.

The monthly rise was driven by higher prices for food (+0.9), with
fruits up 3.9% and vegetables up 3.1%. Clothing and shoes rose 0.8%. On
the energy side, light heating oil climbed 1.9%, motor fuel 0.9%, gas
0.2% and electricity 0.1%.

Downward pressure came from prices for leisure time and
entertainment activities, which dropped 1.0%. Packaged holiday tours
were 3.8% cheaper than a month ago. Restaurant and hotel services fell

In an annual comparision, food prices climbed 3.4%, with vegatables
up 12.8% and fruit up 10.0%. Clothing and shoes rose 2.7%. Light heating
oil was up 19.0%, motor fuel 7.0%, electricity 3.4% and gas 1.3%.
Packaged holiday tours were down 1.5%.

Core inflation was also moderate in November. CPI ex-energy was
flat on the month and up 1.1% on the year.

Underlying inflation pressure will likely remain subdued for the
time being, analysts predict. They note that despite the ongoing
economic recovery, economic activity is still well below pre-recession

Given slowing global demand and increasing fiscal tightening, the
German economic recovery is set to moderate. Remaining spare capacity is
thus expected to keep core inflation down.

The Bundesbank forecast last week that inflation will increase at a
“stability-consistent” path. It forecast German HICP rising from +1.1%
this year to +1.7% next year and falling back to +1.6% in 2012. HICP
ex-energy is tabled at +0.7% in 2010, +1.1% in 2011 and +1.5% in 2012.

The main risks for price stability are coming from international
commodities markets, the central bank said. Given the expected strong
global economic growth, a stronger rise of commodity prices “is not
unlikely,” it said. This would have an immediate impact on energy and
food prices, it pointed out.

While wages could also rise more strongly than expected in Germany,
they would only have an impact on inflation at the end of the
forecasting period, the Bundesbank remarked.

European Central Bank Governing Council member Erkki Liikanen said
Wednesday that the Eurozone is not facing a significant price stability
risk, with inflation expected to stay beneath the ECB’s limit of close
to but below 2% this year and next.

–Berlin bureau: +49-30-22 62 05 80; email:

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