May: -0.6% m/m, +8.1 y/y
April: +0.3% m/m, +9.4% y/y
March: +1.1% m/m, +11.3% y/y

FRANKFURT (MNI) – German import prices fell back in May for the
first time since October, reaching a three-month low, as cheaper energy
and intermediate goods imports outweighed higher costs for consumer and
capital goods, the Federal Statistical Office reported on Monday.

May’s 0.6% decline cut the annual rise to 8.1%, its slowest pace
since April 2010. Most analysts had expected the downturn, with
forecasts ranging from -1.1% to +0.3%.

Energy imports were 2.9% cheaper than in April, but still 30.9%
higher than a year earlier. Excluding energy, core import prices were
0.1% lower on the month, resulting in an annual rise of 3.9%.

Given the importance of commodity prices for Eurozone import costs
and their high volatility, it is hard to project future trends.

Cost for imported food products will likely recede in the month
ahead, according to a report by the OECD and the UN Food and Agriculture
Organization released earlier this month. The organizations said that
good harvests in the coming months should push commodity prices down
from the extreme levels seen earlier this year.

The outlook for oil prices is less certain, especially as the
International Energy Agency (IEA) and OPEC are pulling in opposite
directions. In the short term, the energy contribution to import prices
should recede, given the recent trend in oil prices.

Since the June 8 OPEC meeting, when member states decided not to
step up production, crude prices have recovered significantly, prompting
the International Energy Agency (IEA) to release an extra 60 million
barrels of oil on to the world market.

Brent crude fell to fourth-month lows after the IEA announcement.
Prices have since staged a partial comeback, and some analysts argue
that the impact of IEA’s action may be short-lived. Some OPEC members
warned that they may take countermeasures to prop up the oil price.

In May, intermediate good imports were 0.2% cheaper than in April,
giving an annual increase of 7.4%. Capital goods import prices rose 0.3%
on the month and were down 0.8% on the year.

With both consumer durables and non-durables more expensive on the
month, overall consumer goods import prices were up 0.2% compared to
April and were 2.7% higher than in May 2010.

Export prices were up 0.1% on the month and 3.8% higher on the
year, the statistics office added.

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

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