North-Rhine Westphalia CPI

September: -0.2% m/m, +1.1% y/y
August: +0.2% m/m, +1.0% y/y
—
Pan-German CPI

MNI median forecast: -0.2% m/m, +1.3% y/y
MNI forecast range: -0.2 to +0.2% m/m

August: flat m/m, +1.0% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
North-Rhine Westphalia fell 0.2% back in September, still boosting
modestly the annual inflation rate to +1.1% from +1.0% in August, the
state statistics office said Tuesday.

The monthly decline was in line with the median forecast for
pan-German CPI in an MNI survey of analysts.

As in the other states, upward pressure on annual inflation rates
came from heating oil (+23.3%) and motor fuel (+9.2%). Excluding these
two components, annual core prices rose only 0.7%. Interestingly, the
monthly 1.7% rise in heating oil prices and the 1.0% growth in motor
fuel prices left no discernable impact on overall price growth, as
reflected in the core rate also at -0.2%.

Seasonal food prices (-0.7% m/m, +14.1% y/y) also had an upward
effect on yearly price developments. Factoring out the component, core
CPI was up +1.0%. The impact on monthly inflation was the opposite,
however, with core CPI -0.1% since August.

Analysts expect inflation to remain low still for a fairly long
time, pointing to the remaining slack in the economy. Underlying weak
inflation is expected to offset rising energy and food prices. Wage
growth in all likelihood will stay subdued, given that pay deals have
been very moderate up to now.

The Bundesbank asserted last month that “for the coming months a
continued moderate price increase is to be expected.”

At the Eurozone level there is also no sign that inflation will
move appreciably higher over the medium term. ECB Governing Council
member Ewald Nowotny said last week, “We see at this time in the ECB
system and also over the medium term no tendency toward an increase in
inflation above the ECB goal” of close to but below 2%.

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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