North-Rhine Westphalia CPI

June: flat m/m, +0.7% y/y
May: +0.1% m/m, +1.0% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +0.9% y/y
MNI forecast range: -0.1% to +0.2% m/m

May: +0.1% m/m, +1.2% y/y

—

BERLIN (MNI) – Consumer prices in the western German state of
North-Rhine Westphalia were unchanged on the month in June, dampening
the annual inflation rate to 0.7% from +1.2% in May, the state
statistics office said Monday.

The monthly result was below the median forecast for both monthly
and annual pan-German CPI. Monthly results for Saxony and Brandenburg
were in line with median forecasts, while Hesse was below with a flat
monthly reading as well.

As in the other states, energy prices had no effect on the monthly
rate, while the boost on the annual print was apparent. Excluding
heating oil (-1.1% m/m, +24.2% y/y) and motor fuel prices (+0.2% m/m,
+9.6% y/y), core inflation was 0.4 percentage points lower at 0.3% y/y.

Among the larger components of the CPI, rents, including utility
prices, were unchanged compared to May, leaving prices up 1.2% on the
year. Food was up 0.2% and 2.0% on the month and year, respectively,
lifted by the strong jump in seasonal food prices, which were 6.6%
higher than one year ago.

Inflation rates will likely remain near their current levels for
the coming months given the huge spare capacity in the German economy.
Wage growth in all likelihood will remain subdued. Trade unions so far
this year have settled for moderate wage deals.

Deflation risks are still relatively low, analysts argue, noting
that the weak euro exchange rate is making imports more expensive. They
also point out that corporate selling price expectations have turned
around recently.

Others, however, reckon that imported inflation is offset by strong
downward pressure on underlying domestic prices and warn that deflation
remains a threat for the Eurozone as a whole.

The Bundesbank earlier this month forecast German average inflation
of +1.2% this year and +1.6% next year.

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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