Bavaria CPI

April: +0.3% m/m, +2.5% y/y
March: +0.5% m/m, +2.1% y/y
—
Pan-German CPI

MNI median forecast: +0.1% m/m, +2.2% y/y
MNI forecast range: -0.1% to +0.4% m/m

March: +0.5% m/m, +2.1% y/y
—

BERLIN (MNI) – Consumer prices in the German state of Bavaria rose
0.3% in April, lifting the annual inflation rate to +2.5% from +2.1% in
March, the state statistics office said Wednesday.

The monthly result was above the +0.1% median forecast for
pan-German CPI in an MNI survey of analysts. Earlier today, the western
German states of North Rhine Westphalia and Hesse also both posted
monthly inflation rates of +0.3%, while the eastern German states of
Saxony and Brandenburg tabled rates of +0.4% and +0.2%, respectively.

As in the other states, upward pressure on monthly inflation in
Bavaria came from energy prices, with motor fuel up 2.1% and heating oil
up 1.0%.

Due to the Easter holiday period, packaged holiday tours were 0.2%
more expensive on the month. Hotel and restaurant services also rose
0.2%.

Prices for clothing and shoes climbed 0.1% on the month.

Food prices fell 0.1% on the month, with seasonal food prices
declining by 0.9%. Alcoholic drinks and tobacco products rose by 0.1%.

Annual inflation was again marked by the rise in energy and food
prices. Heating oil prices rose 27.6% and motor fuel 13.6%. Food prices
climbed 1.8%, with seasonal food down 2.7%.

Packaged holiday tours rose 10.5% on the year and hotel and
restaurant services 0.5%. Alcoholic drinks and tobacco products rose
0.5%, while clothing and shoes were down 0.4%.

CPI excluding heating oil and motor fuel rose 0.1% on the month and
1.7% on the year.

Analysts caution that businesses will increasingly pass on their
high input costs, driven by the spike in energy prices. Selling price
expectations have risen across the board, they point out.

Some analysts already warn of a broad upward trend in inflation
which would increasingly weigh on consumer sentiment. Annual inflation
rates above 2% could become the norm, they fear.

Bundesbank President Axel Weber said earlier this month that
inflation in the Eurozone could average as much as 2.5% this year and
price pressures in Germany may be even more intense.

In Germany, inflation “should also be significantly above 2%,”
Weber said. “I even expect towards the end of the year and in the second
half due to base effects…rates of increase that could be just under
3%.”

European Central Bank president Jean-Claude Trichet said in a
newspaper interview on Tuesday that it is “extremely important to
prevent second-round effects after the ‘hump’ in the headline inflation
rate.” It is “not acceptable,” he said, to allow any perception that
energy and food inflation might become persistent influences on overall
inflation.

“We have risks of second-round effects here and there,” Trichet
observed. “We have to be very alert that they do not materialise.” In
fact, he said, “at the moment I do not see any significant materialising
of second-round effects and I do not see un-anchoring of inflation
expectations. But this is no time for complacency.”

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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