FRANKFURT (MNI) – Germany’s annual inflation rate looks to have slowed
again in March, mostly in line with market expectations as energy prices
continue applying downward pressure and package vacation prices fell, according
to German state releases published ahead of the national estimate Friday.
Major states North-Rhine Westphalia, Hesse and Bavaria all matched MNI’s
median forecast of +0.3% for pan-German CPI on the month. Annual inflation,
forecast in MNI’s poll at +1.1%, was more mixed, with Hesse reporting y/y
inflation at +1.0% and Bavaria +0.9%, while NRW posted higher y/y CPI at +1.4%.
The smaller state of Brandenburg reported prices up just +0.2% m/m and +1.0%
y/y.
If confirmed, March inflation would be down slightly from February’s 0.5%
m/m increase and 1.2% y/y. In harmonized EU terms, prices rose 0.5% on the month
and 1.0% on the year in February. The median in MNI’s poll of analysts expects
March to match the February HICP numbers, but state data suggests downside risks
to this forecast.
Core inflation remains slightly higher on the year as energy prices in
particular continue to put pressure on prices, though still not at the European
Central Bank’s target of close to but below 2%.
Annual inflation ex-energy stood at +1.5% in NRW, Hesse and Brandenburg and
+1.1% in Bavaria. Core prices were driven largely by gains in medium-term
durable goods and still-rising rent costs. Non-durables and longer-term durables
dragged down overall goods prices and services were also lower in part due to
declines of 2.2% y/y in package vacations, a driver of inflation in the past few
years.
For Bavaria, home energy fell 0.8% y/y and petrol prices dropped 2.3%. Food
prices also fell 0.4%. Core inflation was driven by a 2.6% rise in medium-term
durable goods, while services prices rose a lesser 0.9%, but rent costs
increased 1.4% y/y.
Hesse reported home energy prices down 1.5% on the year, including a 0.5%
m/m drop. Food prices by contrast rose 1.6% on the year. Services prices rose
1.4% excluding rent costs, which rose 1.7% on the year. Goods prices rose just
0.3% y/y.
NRW reported petrol prices down 3.4% on the year and home energy down 0.6%
y/y, including a 0.5% drop on the month. Services prices and rent prices both
rose a stronger 1.8%, while overall goods prices rose just 1.0%.
Germany’s federal statistical agency is due to publish pan-Germany CPI
figures Friday afternoon.
If confirmed, the weak German inflation data would also seem to confirm
expectations of a further decline in Eurozone inflation due to be published
Monday.
–MNI Frankfurt Bureau; tel: +49 69-720-142; email: ccermak@mni-news.com
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