Saxony CPI

July: +0.4% m/m, +2.5% y/y
June: +0.1% m/m, +2.3% y/y
—
Pan-German CPI

MNI median forecast: +0.3% m/m, +2.3% y/y
MNI forecast range: +0.1 to +0.5% m/m

June: flat m/m, +2.4% y/y
—

BERLIN (MNI) – Consumer prices in the eastern German state of
Saxony rose 0.4% in July, lifting the annual inflation rate to +2.5%
from +2.3% in June, the state statistics office said Wednesday.

The monthly result is above the median forecast of +0.3% for
pan-German CPI in a MNI survey of analysts.

Due to the holiday period, prices for package holiday tours and
airline tickets spiked 10.5% and 14.7% on the month, respectively.
Restaurant and hotel services were up 3.0%.

On the energy side, heating oil prices rose 2.0% on the month,
motor fuel was up 0.4% and gas up 0.3%, while electricity was unchanged.

Downward pressure on monthly inflation came from food prices, which
dropped 0.8%, with seasonal food prices down 5.2%. Clothing and shoes
were 2.3% cheaper than a month ago.

In the annual comparison, heating oil prices rose 26.1%, motor fuel
11.9%, electricity 4.4% and gas 0.2%. Airline tickets were 15.6% more
expensive than a year ago, package holidays were up 2.9% and hotel and
restaurant services up 1.5%.

Prices for clothing and shoes rose 4.4% on the year. Food prices
were up 2.2%, with seasonal food prices down 3.8%.

CPI excluding energy and seasonal food rose 0.5% on the month and
1.8% on the year.

Analysts see 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, they argue.

The Finance Ministry estimated last week that economic growth
weakened markedly in the second quarter. “Leading indicators signal that
in the further course of the year a flatter growth path is to be
expected as well,” it added.

Due to moderating foreign demand for German industrial goods,
industry growth will likely slow through the rest of the year, the
ministry said.

Private consumption is also showing some signs of vulnerability,
which might make it harder for businesses to pass on higher costs to
consumers.

The ongoing sovereign debt crisis and the “lack of discernable
strategy” on how to resolve it are weighing, albeit slightly, on
consumer morale, the GfK Group said on Tuesday.

“Despite the fact that general conditions for domestic demand in
Germany remain very positive, they are not fully compensating for this
uncertainty,” GfK said. As a result, the consumer climate indicator was
projected to fall to 5.4 in August from a downwardly revised 5.5 (5.7)
in July.

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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