Saxony CPI

December: +0.7% m/m, +2.2% y/y
November: -0.1% m/m, +2.6% y/y

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Pan-German CPI

MNI median forecast: +0.8% m/m, +2.2% y/y
MNI forecast range: +0.6% m/m to +1.2% m/m

November: flat m/m, +2.5% y/y
—

FRANKFURT (MNI) – Consumer prices in the eastern German state of
Saxony recovered in December following November’s dip, as costlier
tourism services and food offset cheaper energy, the state’s statistics
office reported on Thursday.

While Saxony’s CPI rebounded 0.7% on the month, the annual increase
slowed to 2.2% from 2.6% in November. For Germany as a whole, the median
forecast of an MNI survey of analysts was for a 0.8% monthly rise,

As Brent crude prices fell over 2% between November and December,
energy costs dipped 0.7% on cheaper household energy (-0.3%) and motor
fuel (-1.5%). Energy prices were still 6.8% higher on the year.

Excluding energy, core CPI rose 0.8% on the month to give an annual
rate of +1.6%.

During the holiday season, package vacation prices surged 19.8% on
the month, lifting overall leisure prices 4.3% to give a 1.4% annual
rise. Vacation lodging was also much more expensive in December, jumping
22.9% for a 2.2% annual gain. Food prices rose 0.5% on the month and
were 2.6% higher on the year.

The December PMI report noted a further decline in German price
pressures, as manufacturers linked cheaper raw material to the third
consecutive dip input prices, while “strong competitive pressures”
limited firms’ price setting behaviour.

Nevertheless, the still promising business outlook could well give
companies room to hike prices further. According to an Ifo institute
survey, the proportion of manufacturers looking to lift selling prices
in the near term recovered in December after a six-month decline to its
highest level since the summer.

Ifo forecasts average CPI at 1.8% next year after 2.3% this year.
The Organisation for Economic Cooperation and Development sees inflation
slowing to 1.6% next year from 2.4%.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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