North Rhine-Westphalia CPI

August: -0.2% m/m, +2.3% y/y
July: +0.4% m/m, +2.7% y/y
—
Pan-German CPI

MNI median forecast: flat m/m, +2.3% y/y
MNI forecast range: -0.2% to +0.2% m/m

July: +0.4% m/m, +2.7% y/y
—

FRANKFURT (MNI) – Consumer prices in the western German state of
North-Rhine Westphalia eased back 0.2% in July, dampening the annual
inflation rate to 2.3% from 2.7% in July, the state statistics office
said Monday.

The monthly result was below the median forecast for no change in
the pan-German CPI in an MNI survey of analysts. Earlier today,
Brandenburg, Hesse and Saxony all posted a monthly decline in prices,
suggesting pan-German inflation will be lower than most analysts
expected.

Due to the summer holiday season, prices for package holiday tours
in NRW spiked 1.5% on the month, but restaurant and hotel fees were off
0.1%.

On the energy side, heating oil prices fell 2.8% on the month,
motor fuel was down 3.7%, while gas was up 0.6% and electricity
unchanged.

In line with the trend in other states, food prices fell 0.3% on
the month, with seasonal food prices alone down 4.0%. Clothing and shoes
were 1.8% more expensive than in July.

In the annual comparison, heating oil prices rose 22.2%, motor fuel
10.7%, electricity 7.2% and gas 6.2%. Package holidays were up 3.1% and
hotel and restaurant services up 2.4%.

Prices for clothing and shoes rose 1.9% on the year. Food prices
were up 2.5%, with seasonal food prices down 3.6%.

CPI excluding seasonal food dipped 0.1% on the month to leave the
annual rate at +2.5%. CPI ex-heating oil and motor fuel was flat on the
month and 1.9% higher on the year.

As yet there are few signs of emerging second-round effects in
Germany. With economic growth expected to cool over the course of the
year and oil prices off their peaks, inflation pressures should ease
somewhat over the medium term.

The August PMI survey showed “inflationary pressures continued to
subside in August, with the latest rise in private sector cost burdens
the slowest since January 2010. Output charge inflation also eased in
August, and was the weakest for nine months.”

Wages have remained remarkably time and are lagging inflation. Pay
settlements in Q2 gave a 1.6% rise on the year (+1.3% if corrected for
one-off payments) after +1.1% in Q1, the Bundesbank said last week.

With Eurozone inflationary pressures subsiding on the back of the
baseline effects related to lower commodity prices and in light of the
lower expected activity growth, some analysts now believe the ECB will
keep rates unchanged until the end of 2012.

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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