Hesse CPI

August: +0.1% m/m, +0.7% y/y
July: +0.3% m/m, +0.9% y/y
—
Brandenburg CPI

August: flat m/m, +1.0% y/y
July: +0.3% m/m, +1.1% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +1.1% y/y
MNI forecast range: flat to +0.2% m/m

July: +0.3% m/m, +1.2% y/y
—

BERLIN (MNI) – August consumer prices in the western German state
of Hesse rose 0.1% on the month and were flat in the eastern German
state of Brandenburg, the respective state statistics offices said
Friday.

The monthly CPI result of Hesse was in line with the median
pan-German forecast in an MNI survey of analysts, while that of
Brandenburg was slightly below. Saxony earlier today also posted a flat
monthly reading, while North Rhine-Westphalia reported a 0.2% rise.

Annual inflation rates were positive both in Hesse (+0.7%) and
Brandenburg (+1.0%).

As in the other states, downward pressure on monthly inflation came
from food prices as well as from hotel and restaurant services. Energy
price developments were mixed.

Core inflation also remained tame in August. CPI excluding heating
oil and motor fuel rose 0.1% on the month in Hesse and was flat in
Brandenburg. On the year, it was up 0.5% in Hesse and 0.8% higher in
Brandenburg.

Despite the ongoing 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

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