Hesse CPI

March: +0.4% m/m, +1.8% y/y
February: +0.6% m/m, +1.8% y/y
—
Brandenburg CPI

March: +0.5% m/m, +2.0% y/y
February: +0.6% m/m, +1.8% y/y
—
Pan-German CPI

MNI median forecast: +0.4% m/m, +2.1% y/y
MNI forecast range: +0.2% to +0.7% m/m

February: +0.5% m/m, +2.1% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of Hesse
rose 0.4% in March and increased 0.5% in the eastern German state of
Brandenburg, the respective state statistics offices said Tuesday.

The median of an MNI survey of analysts is for pan-German inflation
of +0.4% on the month. Both North Rhine-Westphalia and Saxony have
posted monthly CPI increases of 0.5%.

Annual inflation rates in March stood at +1.8% in Hesse and +2.0%
in Brandenburg.

As in NRW and Saxony, upward pressure on monthly inflation in Hesse
and Brandenburg came mostly from energy prices. Clothing and shoes were
also more expensive than a month ago. Food prices, however, fell on the
month. Packaged holiday tour fees were also cheaper.

Annual inflation was again marked by the surge in energy and food
prices.

Analysts expect only a moderate acceleration of inflation over the
coming months and see no marked danger of a price-wage spiral at the
moment. Still, they caution that businesses will increasingly pass on
their high input costs, driven by the spike in energy prices.

Bundesbank President Axel Weber warned earlier this month that the
“price climate [in Germany] has … deteriorated”. He added, though,
that “it should not be forgotten that up to now, this has been due
mostly to exogenous shocks, particularly from energy prices”.

Still, early monetary tightening by the European Central Bank is
warranted to counter inflationary pressures that may be more permanent
than currently projected, the ECB Governing Council member said.

ECB Executive Board member Juergen Stark, a German national, said
last week that he sees risks of second-round inflation effects in the
Eurozone and added that, while inflation expectations remain anchored,
uncertainty has increased.

Speaking with the Japanese publication Nikkei, Stark also said that
“conditions are there and there are good reasons to normalise the
monetary policy stance,” when asked about a possible rate increase next
month.

“But I think that given the heightened uncertainty I cannot make
any commitment for the ECB nor for the Governing Council,” Stark said.
“And the ECB did not commit to anything.”

However, the central banker noted that the ECB’s staff projections
took into account market expectations of a rate increase. Stark also
highlighted the correct perception that the central bank was more
concerned regarding the inflation outlook.

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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