North Rhine-Westphalia CPI

October: flat m/m, +1.9% y/y
September: flat m/m, +1.6% y/y
—
Pan-German CPI

MNI median forecast: flat m/m, +2.0% y/y
MNI forecast range: -0.1% to +0.1% m/m

September: flat m/m, +2.0% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of North
Rhine-Westphalia were overall unchanged in October, lifting the annual
inflation rate to +1.9% from +1.6%, the state statistics office said
Monday.

The monthly result is in line with the median forecast for a flat
reading of pan-German CPI in a MNI survey of analysts. The western
German state of Hesse on Friday also posted a flat reading. Saxony and
Brandenburg both registered earlier on Monday monthly CPI rises of 0.1%.

Upward pressure on inflation in North Rhine-Westphalia came from
prices for clothing and shoes, which rose 1.9% on the month. Food prices
climbed 0.4%, with seasonal food also up 0.4%.

Energy prices were mixed, with heating oil up 2.1%, while
electricity remained flat and gas and motor fuel decreased by 0.1% and
5.4%, respectively.

Prices for packaged holiday tours fell 3.1%. Hotel and restaurant
services dropped 0.3%.

Annual inflation was again marked by rising energy prices. Heating
oil prices rose 11.7%, electricity prices climbed 3.8%, motor fuel was
up 3.7%, and gas prices rose 2.2%.

Food prices were 2.6% higher than a year ago, with seasonal produce
up 7.1%. Prices for clothing and shoes were up 2.1% on the year.

CPI excluding heating oil and motor fuel was up 0.2% on the month
and 1.6% on the year. CPI-ex seasonal food was flat on the month and
1.9% higher on the year.

The Finance Ministry said last week it expects only moderate
inflation in Germany over the coming months given the subdued global
economic trends. In its latest economic forecast released earlier this
month, the government predicted inflation of 2.0% this year and 1.9%
next year.

Import prices in Germany fell back in September due to declines in
most major components led by energy.

Some analysts, however, expect inflation in Germany to pick up over
the medium term given that monetary policy in the Eurozone is too
expansionary for Germany.

Pipeline price pressures seem to be mounting in the private sector,
the PMI polls suggest, with input costs seeing another moderate rise in
October (55.0). Pricing-power, by contrast, remained subdued due to
strong competition and weaker demand. Output prices increased only
slightly in October (50.7) after three months of marginal decline.

While stronger wage growth could lead to inflation risks down the
road, Pier Carlo Padoan, chief economist with the Organisation for
Economic Cooperation and Development, argued recently that Germany
should consider raising its inflation tolerance to help debtor Eurozone
members better adjust.

By accepting higher wage inflation, creditor countries like Germany
could provide a boost to debtor countries via increased consumption,
while lower wages would allow the Eurozone’s debtor nations to be more
competitive, Padoan said.

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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