BW CPI

April: -0.2% m/m, +1.1% y/y
March: +0.7% m/m, +1.3% y/y
—
Pan-German CPI

MNI median forecast: +0.2% m/m, +1.2% y/y
MNI forecast range: -0.1% to +0.2% m/m

March: +0.5% m/m, +1.1% y/y
—

FRANKFURT (MNI) – Consumer prices in the German state of
Baden-Wuerttemberg fell on the month in April, as cheaper services,
leisure, entertainment and culture more than offset costlier energy and
food, the state’s statistics office reported on Wednesday.

As a result of the 0.2% decline, the annual print came to +1.1%.
The median forecast for Germany as a whole is currently at +0.2% m/m and
+1.2% y/y.

The sharpest falls on the month were noted in leisure costs
(-3.0%), followed by hotel and restaurant prices (-1.3%). These,
however, were partially negated by more expensive motor fuel (+1.6%),
food (+1.1%) and household energy (+0.6%), the latter boosted by the
4.2% rise in heating oil costs.

On the year, heating oil (+31.9%) and motor fuel (+18.9%) prices
led the way in gains. On the other side of the spectrum, leisure and
entertainment posted the sharpest decline, slipping 1.9% compared to
April 2009.

While the base effects of oil prices are expected to wane in the
coming months, the recent strengthening of crude costs is likely to
delay this.

Households polled in the latest GfK consumer sentiment report
highlighted that, despite a more optimistic outlook for both the economy
and their own financial situations, rising oil prices were lifting
overall price expectations, thus hindering the propensity to spend.

According to the research group’s confidence indicator, households’
desire to buy declined April, adding to March’s modest slide.

Other commodity prices, especially food, are also expected to lift
consumer prices over the medium term, due to growing demand from
emerging economies, the International Monetary Fund said in its latest
World Economic Outlook report.

Nevertheless, government inflation forecasts point to moderate
price growth in Germany. Currently, the national consumer price index is
expected to average a growth rate of 1.3% in 2010 before accelerating
slightly to +1.4% next year.

Forecasts out of various economic institutes, as well as the IMF,
also suggest moderate gains in consumer prices over this year and the
next.

Germany’s leading economic institutes and the Fund forecast German
annual average harmonised inflation of +0.9% and +1.0% this year and
next. DIW forecasts for 2010 were similar. However, prices are expected
to jump 1.3% over 2011, according to DIW, mainly driven by energy and
commodity prices.

— Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com

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