Saxony CPI

February: +0.5% m/m, +2.2% y/y
January: +0.5% m/m, +1.9% y/y
—
Pan-German CPI

MNI median forecast: +0.5% m/m, +2.1% y/y
MNI forecast range: +0.4% to +0.7% m/m

January: -0.4% m/m, +2.0% y/y
—

BERLIN (MNI) – Consumer prices in the eastern German state of
Saxony rose 0.5% in February, lifting the annual inflation rate to +2.2%
from +1.9% in January, the state statistics office said Friday.

The annual rate rose for the first time since October 2008 above
the threshold of 2%, the statistics office pointed out.

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

Upward pressure on monthly inflation came from food prices (+1.2%),
especially seasonal food prices (+4.3%) and fruits (+6.0%). On the
energy side, increases were seen for heating oil (+2.5%), motor fuel
(+0.3%) and electricity (+0.2%), while gas remained unchanged.

Packaged holiday tours jumped 7.3% and airline tickets climbed
2.8%. Hotel and restaurant services were 0.5% more expensive than a
month ago.

Annual inflation was again marked by the upward surge of energy and
food prices. Heating oil prices rose 30.5%, motor fuel 11.8%,
electricity 6.5%, while gas fell 1.4%. Food prices climbed 4.1%, with
seasonal food up 11.1% and fruits up 17.5%.

Underlying inflation remained moderate in February. CPI excluding
energy and seasonal food rose 0.4% on the month and 1.1% on the year.

While analysts acknowledge that there exist upside risks to
inflation, they see no danger of a price-wage-spiral at the moment.

Economics Minister Rainer Bruederle said earlier this week that
rising energy prices do not yet risk spawning second-round inflation
effects in Germany. “This is always a risk, but I hope that it will stay
contained,” he added.

However, Bundesbank Board member Andreas Dombret cautioned Thursday
that elevated inflation in Germany and the Eurozone might prove more
stubborn this year than initially assumed.

“Higher inflation could definitely prove more persistent than
assumed up to now,” the central banker warned. “Second-round effects
also cannot be ruled out.”

The price climate in Germany and the Eurozone has clearly worsened
due to global trends for energy, commodities and food, Dombret pointed
out.

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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