Bavaria CPI

December: +0.7% m/m, +2.4% y/y
November: flat m/m, +2.5% y/y

—

Pan-German CPI

MNI median forecast: +0.8% m/m, +2.2% y/y
MNI forecast range: +0.6% m/m to +1.2% m/m

November: flat m/m, +2.5% y/y
—

FRANKFURT (MNI) – Consumer prices in the German state of Bavaria
picked up speed in December, led by strong gains in tourism services,
which offset cheaper energy products, the state’s statistics office
reported on Thursday.

After stagnating in November, consumer prices rose 0.7% in
December, reducing the annual gain 0.1 percentage point to 2.4%.

All reporting states have so far posted weaker monthly increases
than the analysts survey median forecast for pan-Germany of +0.8%,
suggesting that the national figure will surprise to the downside.

As Brent crude slipped over 2% between November and December, motor
fuel prices in Bavaria fell 2.5%, resulting in a 0.3% drop in transport
prices. Thanks to a 3.3% decline in heating oil prices, household energy
was 0.4% cheaper than in November, but up 9.6% on the year.

Excluding energy, core CPI was up 1.0% on the month and 2.0% higher
on the year.

As in other German states, the strongest monthly price gains were
for vacation lodging, up 22.4% for an annual rise of 2.6%. Package
vacations were also significantly more expensive, as prices climbed
19.8% on the month and 3.1% on the year.

Food and non-alcoholic beverages were 0.9% more expensive on the
month to give an annual rate of +2.4%, while alcoholic beverages and
tobacco prices were down 0.2% since November, lifting prices 2.9%
annually.

The December PMI report noted a further decline in German price
pressures, as manufacturers linked cheaper raw material to the third
consecutive dip input prices, while “strong competitive pressures”
limited firms’ price setting behaviour.

Nevertheless, the still promising business outlook could well give
companies room to hike prices further. According to an Ifo institute
survey, the proportion of manufacturers looking to lift selling prices
in the near term recovered in December after a six-month decline to its
highest level since the summer.

Ifo forecasts average CPI at 1.8% next year after 2.3% this year.
The Organisation for Economic Cooperation and Development sees inflation
slowing to 1.6% next year from 2.4%.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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