Saxony CPI

August: -0.1% m/m, +2.4% y/y
July: +0.4% m/m, +2.5% y/y
—
Pan-German CPI

MNI median forecast: flat m/m, +2.4% y/y
MNI forecast range: -0.2 to +0.2% m/m

July: +0.4% m/m, +2.5% y/y
—

FRANKFURT (MNI) – Consumer prices in the eastern German state of
Saxony fell back 0.1% in August, dampening the annual inflation rate to
+2.4% from +2.5% in June, the state statistics office said Monday.

The monthly result is below the median forecast of no change for
pan-German CPI in a MNI survey of analysts.

CPI excluding energy and seasonal food was flat on the month and
+1.8% on the year.

On the energy side, heating oil prices fell 3.5% on the month,
motor fuel fell 1.2%, while gas was up 0.3% and electricity up 0.2%.

Food prices eased back 0.6%, with seasonal food prices dropping
4.8%. Prices for clothing and shoes fell 0.9% on the month.

Despite the holiday period, prices for airline tickets, package
holidays and holiday-home rentals dropped 1.8%, 1.5% and 3.3% on the
month, respectively.

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 amid the pick-up in 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
expected weaker 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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