Flash May HICP: +0.1% m/m, +1.2% y/y

MNI median forecast: +0.1% m/m, +1.2% y/y
MNI forecast range: flat to +0.2% m/m

Final Apr HICP: -0.1% m/m, +1.0% y/y
————–
Flash May CPI: +0.1% m/m, +1.2% y/y

MNI median forecast: +0.1% m/m, +1.2% y/y
MNI forecast range: -0.3% to +0.3% m/m

Final Apr CPI: -0.1% m/m, +1.0% y/y
————–

BERLIN (MNI) – German consumer prices in May rose 0.1% both in
national terms and in EU-harmonized terms, giving an annual increase of
1.2% for both CPI and HICP, the Federal Statistical Office (FSO)
estimated Thursday.

The outcome was in line with the median forecast in the Market News
survey of analysts.

As usual, the FSO provided few details on price developments with
the flash release. However, state CPI reports highlighted the rise in
leisure and hotel and restaurant prices, while noting the slowdown in
energy prices and cheaper food.

While analysts expect energy prices to continue trending upward,
they see underlying inflation remaining moderate for the time being. The
huge spare capacity in the German economy and the cloudy outlook for
consumer spending leave firms little leeway to hike prices, they note.

Concerns about government debt in the Eurozone and worries about
the stability of the euro are eroding consumer confidence in Germany,
GfK reported Wednesday. GfK’s forward-looking indicator fell to 3.5 in
June after May’s downwardly revised 3.7 (3.8).

With unemployment expected to rise throughout the year — albeit
less than initially feared — wage growth in all likelihood will remain
subdued. German trade unions so far this year have settled for moderate
wage deals.

The Bundesbank noted in its monthly report released Wednesday that
recent German CPI rises have been mainly driven by increasing energy
prices. “Upward price pressures from the domestic economy will likely
remain for the time being extremely limited,” the central bank said.

The German government forecasts average inflation rates of +1.3% in
2010 and +1.4% next year. The country’s leading economic institutes
project average inflation of only +0.9% and +1.0% this year and next.

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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