Bavaria CPI

February: +0.7% m/m, +1.4% y/y
January: -0.6% m/m, +1.8% y/y

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Pan-German CPI

MNI median forecast: +0.7% m/m, +1.7% y/y
MNI forecast range: -0.5% to +0.8% m/m

January: -0.5% m/m, +1.7% y/y

—

BERLIN (MNI) – Consumer prices in the western German state of Bavaria rose
0.7% in February, dampening the annual inflation rate to +1.4% from +1.8%, the
state statistics office said Thursday.

The monthly result is in line with the median forecast for pan-German CPI
in a MNI survey of analysts.

During the holiday season, package holiday tours spiked 11.0% on the month.
Upward pressure on monthly inflation came also from clothing and shoes, which
rose 3.9% after the end of winter sales. Motor fuel rose 2.9% and household
energy climbed 0.4%, with light heating oil up 1.8%. Food prices fell 0.5%.

In the annual comparison, household energy was up 5.0% and motor fuel rose
0.6%. Food prices were 2.1% higher than a year ago.

Core inflation remained tame in February. CPI excluding heating oil and
motor fuel was up 0.6% on the month and 1.7% higher on the year.

Inflation pressure in Germany is seen remaining moderate in the near
future. While favorable base effects keep energy prices in check, an overall
still solid euro is weighing on import prices. Mainly due to sinking prices for
energy goods, import prices in January were 0.8% lower on the year, the first
annual decline since December 2009.

A growing majority of analysts polled by Germany’s ZEW economic research
institute in February expected no pick-up in inflation over the coming six
months, while less than 23% foresaw a rise.

The EU Commission last week projected German inflation to slow to 1.8% this
year and to 1.7% in 2014. “While higher labor costs should gradually be passed
on to consumers, the assumed decline in commodity prices tends to lower price
pressures,” it reasoned.

Price pressures in the Eurozone are low at the moment, European Central
Bank Executive Board member Joerg Asmussen said Monday. Inflation should fall
below 2% over the next months and long-term inflation expectations are firmly
anchored, he remarked. “We see no inflation pressure currently, but you can be
assured that if we saw inflation pressure, we would act immediately,” the
central banker stressed.

For detailed information see data table on MNI MainWire.

–MNI Berlin Bureau; tel: +49 30-226-20580; email: twidder@mni-news.com

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