North-Rhine Westphalia CPI

March: +0.5% m/m, +2.0% y/y
February: +0.6% m/m, +2.1% 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
North-Rhine Westphalia rose 0.5% in March, dampening the annual
inflation rate to +2.0% from +2.1% in February, the state statistics
office said Monday.

The monthly result was above the +0.4% median forecast for
pan-German CPI in an MNI survey of analysts.

Upward pressure on monthly inflation came from energy prices, with
heating oil up 8.0%, motor fuel up 2.7% and electricity up 1.0%. Gas
prices, however, fell 0.2%. Prices for clothing and shoes rose 4.3%.

Food prices remained unchanged on the month, with seasonal food
prices declining by 2.5%. Restaurant services were down 3.4% and
packaged holiday tours fell 2.2%.

Annual inflation was again marked by the upward surge of energy and
food prices. Heating oil prices rose 32.6%, motor fuel 7.7%, electricity
7.6% and gas 4.5%. Food prices climbed 2.3%, with seasonal food up 0.4%.

Underlying inflation remained relatively moderate in February. CPI
excluding heating oil and motor fuel rose 0.3% on the month and 1.5% on
the year.

Analysts expect only a moderate acceleration of headline inflation
over the coming months and see no marked danger of a price-wage spiral
at the moment. Still, they also 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 in the Eurozone 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 the risk of second round inflation effects in the
Eurozone and added that, while inflation expectations remain anchored,
uncertainty has increased.

Speaking with 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 the data table on MNI’s MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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