Hesse CPI

April: +0.3% m/m, +2.1% y/y
March: +0.4% m/m, +1.8% y/y
—
Brandenburg CPI

April: +0.2% m/m, +2.2% y/y
March: +0.5% m/m, +2.0% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +2.2% y/y
MNI forecast range: -0.1% to +0.4% m/m

March: +0.5% m/m, +2.1% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of Hesse
rose 0.3% in April and 0.2% in the eastern German state of Brandenburg,
the respective state statistics offices said Wednesday.

Monthly CPI results in the two states were above the median
pan-German forecast of +0.1% in an MNI survey of analysts. Saxony
earlier posted a monthly price rise of 0.4%.

Annual inflation rates in April rose to +2.2% in Brandenburg and
+2.1% in Hesse. The Hesse statistics office pointed to a calendar effect
from the late Easter holiday period this year. Without the one-off
effect of the spike in packaged holiday tours (+10.5% y/y) the annual
inflation rate in Hesse would have likely remained at +1.8%, it said.

As in Saxony, upward pressure on monthly inflation in Brandenburg
and Hesse came from energy prices. Food prices fell on the month in
Brandenburg and rose in Hesse, with seasonal food prices declining in
both states. Prices for clothing and shoes in Brandenburg and Hesse were
lower than a month ago.

Annual inflation was again marked by the rise in energy and food
prices. Analysts caution that businesses will increasingly pass on their
high input costs, driven by the spike in energy prices. Selling price
expectations have risen across the board, they point out.

Some analysts already warn of a broad upward trend in inflation
which would increasingly weigh on consumer sentiment. Annual inflation
rates above 2% could become the norm, they fear.

Bundesbank President Axel Weber said earlier this month that
inflation in the Eurozone could average as much as 2.5% this year and
price pressures in Germany may be even more intense.

In Germany, inflation “should also be significantly above 2%,”
Weber said. “I even expect towards the end of the year and in the second
half due to base effects…rates of increase that could be just under
3%.”

European Central Bank president Jean-Claude Trichet said in a
newspaper interview on Tuesday that it is “extremely important to
prevent second-round effects after the ‘hump’ in the headline inflation
rate.” It is “not acceptable,” he said, to allow any perception that
energy and food inflation might become persistent influences on overall
inflation.

“We have risks of second-round effects here and there,” Trichet
observed. “We have to be very alert that they do not materialise.” In
fact, he said, “at the moment I do not see any significant materialising
of second-round effects and I do not see un-anchoring of inflation
expectations. But this is no time for complacency.”

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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