Hesse CPI

June: +0.1% m/m, +2.1% y/y
May: -0.2% m/m, +2.0% y/y
—

Brandenburg CPI

June: +0.1% m/m, +1.9% y/y
May: -0.1% m/m, +1.9% y/y
—

Pan-German CPI

MNI median forecast: +0.1% m/m, +2.3% y/y
MNI forecast range: flat to +0.3% m/m

May: flat m/m, +2.3% y/y
—

FRANKFURT (MNI) – Consumer prices in the German states of Hesse and
Brandenburg rose 0.1% in June, in line with the median forecast for
pan-German CPI in a Market News International survey of analysts.

The monthly CPI upturn boosted the annual inflation rate in Hesse
to 2.1% from 2.0% in May and left the annual rate in Brandenburg steady
at 1.9%.

In Hesse, food and drink prices were down 0.4% m/m and up 2.9% y/y,
rents and utilities cost were unchanged on the month and up 2.9% y/y and
transport dropped 0.3% m/m, taking the annual increase to 3.9%

In Brandenburg, a 0.4% monthly rise household energy prices helped
to lift apartment and utility prices 0.1% on the month and 2.4% on the
year. Transport prices were down 0.9% on the month due to a sharp fall
in motor fuel prices, resulting in an annual rise of 3.7%. Conversely,
leisure prices were up 1.4% on both the month and the year, as package
holiday prices jumped 7.2% between May and June.

The Bundesbank expects inflation to average 2.5% this year, with
energy prices alone up 10%. Assuming that consumers spend one tenth of
their budget on energy, the central bank estimates that energy would add
one percentage point to headline inflation. The core rate, which
excludes energy, is expected at +1.5%.

Next year, the Bundesbank sees inflation slowing to +1.8%, with the
core rate at +1.6%.

“Due to the lagged effects of higher crude oil prices on gas prices
and the shared cost of amenities as well as to continually rising costs
for a more environmentally friendly generation of electricity, energy
prices will probably increase disproportionately in 2012, too
although, at just under 3%, at a much weaker rate than in 2011,” the
Bundesbank argued.

The European Commission also sees energy exerting further upward
pressure on inflation this year, boosting HICP to an average of +2.6%
from +1.2% last year. HICP would then slow to +2.0% in 2012. The core
rate would “remain contained” at 1.3% and 1.8%, respectively, this year
and the next, with “no significant second-round effects” expected, the
Commission added.

After six months of increase, consumers’ assessment of future price
trends were unchanged in May at a nearly three-year high, the
Commission’s survey showed. Conversely, selling price expectations
across all major sectors except retailing eased in May after record
highs in both industry and services.

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

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