Baden-Wuerttemberg CPI

August: flat m/m, +0.9% y/y
July: +0.2% m/m, +1.3% y/y

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Pan-German CPI

MNI median forecast: +0.1% m/m, +1.1% y/y
MNI forecast range: flat to +0.2% m/m
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BERLIN (MNI) – Consumer prices in the western German state of
Baden-Wuerttemberg came in flat in August, dampening the annual rate to
0.9% from 1.3% in July, the state statistics office said Friday.

The monthly rise is below the 0.1% median forecast for the national
CPI for August in an MNI survey of analysts. Earlier Friday, Saxony and
Brandenburg also posted flat readings on the month. Hesse and Bavaria
reported CPI rises of 0.1% while North Rhine-Westphalia reported a 0.2%
increase.

As in the other states, downward pressure on monthly inflation came
from food prices, which fell 1.2%, with seasonal produce down 6.0%. On
the energy side, heating oil prices declined by 1.0% and motor fuel
prices fell 1.5%.

Upward pressure came from prices for clothing and shoes which
climbed 2.1%.

In the annual comparison, heating oil prices rose 13.4% and motor
fuel prices 4.4%. Food prices were 1.6% higher than a year ago, while
prices for clothing and shoes were up 2.0% on the year.

Despite the robust economic upswing, both headline and core
inflation rates are seen remaining low over the coming months. The
remaining slack in the economy is expected to offset any increase in
imported inflation related to the weaker euro.

The Bundesbank asserted in its August Monthly Report that “for the
coming months a continued moderate price increase is to be expected
despite the upward pressure from imports.”

Analysts point out that the pricing-power of businesses remains
weak, as private consumption is not expected to become a major growth
engine in coming quarters. Wage growth in all likelihood will stay
subdued, given that pay deals have been very moderate up to now.

At the eurozone level there are also few inflation risks seen at
the moment.

“We continue to expect price developments to remain moderate over
the policy-relevant medium-term horizon, benefiting from low domestic
price pressures,” European Central Bank President Jean-Claude Trichet
said earlier this month.

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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