North-Rhine Westphalia CPI

April: -0.2% m/m, +0.8% y/y
March: +0.6% m/m, +1.2% y/y
—
Pan-German CPI

MNI median forecast: +0.2% m/m, +1.2% y/y
MNI forecast range: -0.1% to +0.2% m/m

March: +0.5% m/m, +1.1% y/y
—
FRANKFURT (MNI) – Consumer prices in North Rhine-Westphalia,
Germany’s largest state, were well below expectations for April, the
state’s statistics agency reported Tuesday.

The 0.2% monthly drop was below MNI’s median forecast, which called
for a 0.2% gain on the month. The 0.8% annual gain was also below the
forecast median of +1.2%.

Among major categories, the biggest decline was in leisure
activites, which dropped 2.9% on the month and was down 2.5% on the
year. Within the category, package holidays dropped 12.1% on the month
and were 9.2% below the previous year.

In other major categories, food and non-alcoholic drinks were up
0.5% on the month, and rose 1.6% on the year. Motor fuels rose 0.6% on
the month and were 16.4% above last year’s levels.

Excluding heating oil and motor fuels, total consumer prices were
down 0.3% on the month and were unchanged on the year.

While the base effects of oil prices are expected to wane in the
coming months, the recent strengthening of crude costs is likely to
delay this.

Households polled in the latest GfK consumer sentiment report
highlighted that, despite a more optimistic outlook for both the economy
and their own financial situations, rising oil prices were lifting
overall price expectations, thus hindering the propensity to spend.

According to the research group’s confidence indicator, households’
desire to buy declined in April, adding to March’s modest slide.

Other commodity prices, especially food, are also expected to lift
consumer prices over the medium term, due to growing demand from
emerging economies, the International Monetary Fund said in its latest
World Economic Outlook report.

Nevertheless, government inflation forecasts point to moderate
price growth in Germany. Currently, the national consumer price index is
expected to average a growth rate of 1.3% in 2010 before accelerating
slightly to +1.4% next year.

Forecasts out of various economic institutes, as well as the IMF,
also suggest moderate gains in consumer prices over this year and the
next.

Germany’s leading economic institutes and the Fund forecast German
annual average harmonised inflation of +0.9% and +1.0% this year and
next. DIW forecasts for 2010 were similar. However, prices are expected
to jump 1.3% over 2011, according to DIW, mainly driven by energy and
commodity prices.

— Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com

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