Final HICP

December: +0.7% m/m, +2.3% y/y (revised from +0.8%/+2.4%)
November: flat m/m, +2.8% y/y

Final CPI

December: +0.7% m/m, +2.1% y/y (unrevised)
November: flat m/m, +2.4% y/y
—

FRANKFURT (MNI) – Preliminary estimates for Germany’s December CPI
were confirmed, resulting in inflation for 2011 as a whole picking up
speed to +2.3% following 2010’s 1.7% rise, the Federal Statistical
Office said on Thursday.

EU-harmonized consumer price inflation in December, however, was
revised down by 0.1 percentage point for both the monthly and yearly
rate, suggesting a similar rewrite for the Eurozone rate.

A 3.0% fall in heating oil prices more than offset a modest 0.3%
gain in gas, cutting household prices by 0.3% on the month and slowing
the annual increase to 9.6%.

Transport prices slipped 0.2% on the month to give an annual rise
of 5.2%, as the 1.6% fall in motor fuel weighed on the CPI component.

Core CPI, which factors out energy, was 0.8% higher than one month
earlier, resulting in an annual rise of 1.3%.

During the holiday month, package vacation prices surged 19.8%
compared to November, lifting the overall leisure component 4.6% on the
month and 1.0% on the year.

Hotel and restaurant prices rose 5.6% to give an 2.0% annual rise.

Food and non-alcoholic beverage prices were 0.6% higher on the
month and 2.5% higher on the year, while alcoholic drinks and tobacco
prices were unchanged compared to November to give an annual rise of
2.6%

Inflation is widely expected to slow as weaker economic activity
and favourable base effects come into play. A further deceleration in
producer prices in November cut the annual increase to a 12-month low.

Last month the International Energy Agency pointed to easing oil
market fundamentals over the longer term: “The intense tightening in
market fundamentals evident during 2009-2011 could ease over the next
five years, the more so if 2012 economic growth takes a sharper downturn
than our base case suggests.”

While the December PMI report spoke of a “solid” rise in input
prices, it said output prices increased at the slowest pace in three
months, “largely reflecting subdued pricing power at private sector
companies.”

The still favorable business outlook could 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 to its highest level since the summer.

Ifo forecasts average CPI at 1.8% this year after 2.3% in 2011. The
Organisation for Economic Cooperation and Development sees inflation
slowing to 1.6% in 2012 year from 2.4%.

The Bundesbank also expects prices to rise 1.8% in 2012 before
increasing 1.5% in 2013.

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

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