In its May monthly report, the Bundesbank says it expects Germany’s consumer price index to show negative annual rates of change in the coming months due to a correction in energy and foodstuff prices since they peaked in mid-2008.
The report reads “The introduction of price cuts in the retail sector in the second half of April should work through fully into the consumer price index in May” adding “Furthermore, more gas suppliers have announced price cuts. Above all, in view of the strong price rises for energy and foodstuffs up to mid-2008, and the following corrections in prices, annual rates in the coming months will at times show up as significantly negative.”
Regarding the economic downturn, the Bundesbank says “The severe financial market crisis and high degree of uncertainty this has caused still threaten to hurt overall economic developments.”
