North Rhine-Westphalia CPI

June: -0.1% m/m, +1.3% y/y
May: -0.3% m/m, +1.5% y/y
—
Pan-German CPI

MNI median forecast: flat m/m, +1.8% y/y
MNI forecast range: -0.2% to +0.1% m/m

May: -0.2% m/m, +1.9% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
North Rhine-Westphalia fell 0.1% in June, lowering the annual inflation
rate to 1.3% from 1.5%, the state statistics office said Tuesday.

The monthly result for the state is below the median forecast of a
flat reading for pan-German CPI in an MNI survey of analysts.

Downward pressure on monthly inflation came from declines in energy
costs, with heating oil down 4.6% and motor fuels down 2.1%, as well as
declines in beer prices (down 4.3%) and clothing (down 1.9%). Upward
pressure came mostly from food prices, up 0.9% on the month, largely due
to gains in fresh fruits and vegetables.

Core inflation, excluding heating oil and motor fuels, was up 0.1%
on the month and 1.3% on the year.

Annual price developments were driven higher by household energy
costs (up 4.9%), while food prices rose 3.2%, the most since December
2010.

Some analysts expect inflation in Germany to pick up over the
medium-term due to solid domestic demand, low unemployment, elevated
wage hikes and the accommodative monetary policy of the European Central
Bank.

The Bundesbank has recently signaled that domestic inflation could
exceed the Eurozone average for some time given the current growth
divergences in the single currency area.

The central bank last week reaffirmed its inflation forecasts of
2.1% for 2012 and 1.6% for 2011. It warned of upward risks to the
forecast stemming from higher than expected oil prices, a further
decline of the euro and possible moderate second round effects following
wage agreements in the first half of 2012.

The German Finance Ministry said last week that the moderate
increase of labor unit costs and the stronger wage hikes this year “are
currently no inflation risk.”

ECB President Mario Draghi said earlier this month that “inflation
expectations remain well anchored and there’s no inflation risk in any
euro area country.”

Producer price inflation in Germany continued to slow in May,
falling to its lowest level in almost two years, the Federal Statistical
Office reported last week, adding to evidence that pipeline pressures
are easing.

For detailed information see the data table on MNI’s Mainwire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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