North Rhine-Westphalia CPI

June: +0.2% m/m, +2.5% y/y
May: -0.1% m/m, +2.3% 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 state of
North-Rhine Westphalia rose 0.2% on the month in June, lifting the
annual gain to 2.5%, the state’s statistical offices reported on
Tuesday.

Among the more heavily-weighted components of the price index,
apartment and utility prices were up 0.1% m/m, with only the gas
component posting a decline from May, bringing the annual gain to 3.6%.

The 7.2% m/m jump in package holiday prices helped lift leisure
prices 1.3% and 1.6% on the month and year, respectively, while
transport prices were up 0.2% on the month and 3.7% on the year, boosted
by the 0.3%-rise in motor fuel prices.

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 to be +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 — from recent
record highs in both industry and services.

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

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