Bavaria CPI

July: +0.5% m/m, +2.3% y/y
June: +0.1% m/m, +2.1% y/y
—
Pan-German CPI

MNI median forecast: +0.3% m/m, +2.3% y/y
MNI forecast range: +0.1% to +0.5% m/m

June: flat m/m, +2.4% y/y
—

BERLIN (MNI) – Consumer prices in the German state of Bavaria rose
0.5% in July, lifting the annual inflation rate to 2.3% from 2.1% in
June, the state statistics office said Wednesday.

The monthly result was above the median forecast of +0.3% for
pan-German CPI in an MNI survey of analysts. Earlier today, Brandenburg
and Hesse posted monthly inflation rates of +0.5%, North
Rhine-Westphalia and Saxony of +0.4%. This suggests that pan-German
inflation will be higher than generally expected.

Due to the start of the summer holiday season, prices for package
holiday tours in Bavaria rose 10.5% on the month. Restaurant and hotel
services were up 3.3%.

On the energy side, heating oil prices rose 2.7% on the month and
motor fuel was up 0.2%, while household energy was +0.7%.

Food prices rose 0.1% on the month, with seasonal food prices alone
down 4.9%. Clothing and shoes were 3.7% cheaper than a month ago.

In the annual comparison, heating oil prices rose 25.7%, motor fuel
12.8% and household energy +9.5%. Hotel and restaurant services up 0.4%.

CPI excluding heating oil and motor fuel climbed 0.5% on the month
and 1.7% on the year.

As yet there are few signs of emerging second-round effects in
Germany. With economic growth expected to cool over the course of the
year and oil prices off their peaks, inflation pressures should ease
somewhat over the medium term.

The Finance Ministry estimated last week that economic growth
weakened markedly in the second quarter. “Leading indicators signal that
in the further course of the year a flatter growth path is to be
expected as well,” it added.

Due to moderating foreign demand for German industrial goods,
industry growth will likely slow through the rest of the year, the
ministry said.

Private consumption is also showing some signs of vulnerability,
which might make it harder for businesses to pass on higher costs to
consumers.

The ongoing sovereign debt crisis and the “lack of discernable
strategy” on how to resolve it are weighing, albeit slightly, on
consumer morale, the GfK Group said on Tuesday.

“Despite the fact that general conditions for domestic demand in
Germany remain very positive, they are not fully compensating for this
uncertainty,” GfK said. As a result, the consumer climate indicator was
projected to fall to 5.4 in August from a downwardly revised 5.5 (5.7)
in July.

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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