Hesse CPI

May: flat m/m, +0.8% y/y
April: -0.1% m/m, +0.8% y/y
—
Brandenburg CPI

May: +0.2% m/m, +1.0% y/y
April: flat m/m, +0.7% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +1.2% y/y
MNI forecast range: -0.3% to +0.3% m/m

April: -0.1% m/m, +1.0% y/y
—

BERLIN (MNI) – May consumer prices remained unchanged on the month
in the western German state of Hesse and increased 0.2% in the eastern
German state of Brandenburg, the respective state statistics offices
said Thursday.

The monthly CPI result in Hesse was below and in Brandenburg above
the median pan-German forecast of +0.1% in an MNI survey of analysts.
Saxony earlier today posted a monthly price rise of 0.1%.

Annual inflation rates were positive both in Hesse (0.8%) and
Brandenburg (1.0%).

As in Saxony, the relatively high number of holidays in May drove
up monthly prices for hotel services and packaged holiday tours.
Downward pressure on monthly inflation came from food and clothing and
shoes.

Annual inflation was again driven by price rises for heating oil,
motor fuel and electricity, while gas prices dropped once more. Food
prices were also higher than a year ago.

Core inflation remained tame in May. CPI ex-heating oil and motor
fuel was up 0.1% m/m and 0.2% y/y in Hesse and rose 0.2% m/m and 0.4%
y/y in Brandenburg.

While analysts expect energy prices to continue trending upward,
they see underlying inflation remaining moderate for the time being. The
huge spare capacity in the German economy and the cloudy outlook for
consumer spending leave firms little leeway to hike prices, they note.

Concerns about government debt in the Eurozone and worries about
the stability of the euro are eroding consumer confidence in Germany,
GfK reported Wednesday. GfK’s forward-looking indicator fell to 3.5 in
June after May’s downwardly revised 3.7 (3.8).

With unemployment expected to rise throughout the year — albeit
less than initially feared — wage growth in all likelihood will remain
subdued. German trade unions so far this year have settled for moderate
wage deals.

The Bundesbank noted in its monthly report Wednesday that recent
German CPI rises have been mainly driven by increasing energy prices.
“Upward price pressures from the domestic economy will likely remain for
the time being extremely limited,” the central bank said.

The German government forecasts average inflation rates of +1.3%
this year and +1.4% next year. The country’s leading economic institutes
project average inflation of only +0.9% and +1.0% this year and next.

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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