December: +2.3 m/m, +12.0% y/y

MNI survey median: +1.0% m/m, +10.8% y/y
MNI survey range: +1.0 m/m to +1.4% m/m

November: +1.2% m/m, +10.0% y/y
—

FRANKFURT (MNI) – German import price inflation surprised to the
upside in December, as energy, intermediate goods and consumer goods
imports all became costlier at the end of 2010, the Federal Statistical
Office reported on Wednesday.

On the month, import prices rose 2.3%, beating all expectations and
lifting the annual inflation rate to +12.0%, its strongest jump since
October 1981. Over 2010 as a whole, import prices were up 7.8% on
average versus 2009, during which time prices had dipped 8.6%.

As Brent crude rose 7.4% between November and December on average,
energy import prices increased 7.7% compared to November and were up
34.2% on the year. Excluding the effects of energy, import price
inflation was a more modest +1.1% and +8.1% on the month and year,
respectively

With oil prices higher in January, energy prices should continue
exerting upward pressure on import price inflation in the near term.

Intermediate goods import prices increased 1.7% m/m and 15.0% y/y,
while consumer goods imports were 0.8% more expensive versus November,
boosting the annual rate to +4.8%.

Capital goods import price inflation came in flat on the month,
resulting in an annual price change of +0.6%.

Recent developments in other commodities, including wheat, sugar,
coal, tin and steel, are also likely to result in higher import prices
soon, which could present upside risks for consumer prices.

German consumer price inflation accelerated to 1.7% in December,
its highest annual rate since late 2008, largely reflecting trends in
energy and non-energy commodities.

Nevertheless, monetary policymakers were quick to stress that price
stability was not endangered, both in Germany and the Eurozone.

“Over the medium term, inflation rates (HICP) under 2% are still to
be expected in the Eurozone, just as in Germany,” Bundesbank President
Axel Weber said.

“At the same time, inflationary risks are still balanced to the
greatest extent possible,” he said. “However, upward risks could
increase.”

“Future price developments must and will be monitored very
precisely,” Weber added.

Export prices were 0.8% higher than in November and +5.2% on the
year, the stats office added.

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

[TOPICS: M$G$$$,MAGDS$,MT$$$$,M$XDS$,M$X$$$]