Wednesday October 28, 11:48 AM
INSTANT VIEW 4-German state data show price pressures soft
BERLIN, Oct 28 (Reuters) - Consumer prices in five German
states showed inflationary pressures in Europe's largest economy
remained soft in October, data showed on Wednesday.
Figures from six German states are used to calculate
Germany's national consumer price index, due out later on
Wednesday. The data is also the first indication of inflationary
pressures in the broader euro zone.
Preliminary data from Germany's most populus states of North
Rhine-Westphalia and Bavaria showed consumer prices unchanged
year-on-year in October and rising 0.1 percent on the month.
The states of Saxony and Hesse showed consumer prices
falling 0.1 percent year-on-year, while in Brandenburg prices
fell 0.2 percent on the year.
The consensus forecast from economists polled by Reuters was
for pan-German consumer prices to rise 0.1 percent
month-on-month and hold steady on the year.
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STATE M/M Y/Y INDEX LINK TO FULL TABLE
NRW +0.1 unch 106.7
BAVARIA +0.1 unch 107.5
HESSE unch -0.1 106.4
SAXONY +0.1 -0.1 108.1
BRANDENBURG unch -0.2 106.7
ECONOMIST COMMENT
MARCO BARGEL, POSTBANK (after four states)
'Year-on-year inflation could hit the zero mark in October.
'Next month we can expect the inflation rate to rise into
positive territory. Energy prices will be above the previous
year's level and the effect will be higher inflation.
'By year's end we expect an inflation rate of 0.7 percent.
Inflation however will not reach dramatic levels far into next
year, and thus the ECB's stability goal is not in danger.'
SIMON JUNKER, COMMERZBANK (after four states)
'Inflation is in a deep sleep. It looks as if it hasn't yet
returned to positive territory. Food prices came down
surprisingly strongly. On the energy side, gas prices eased a
good deal. We expect inflation to start picking up from
November (Frankfurt: A0Z24E - news) . For the full year, we expect inflation to be flat and
in 2010 it will probably stay quite weak. So we will continue to
be blessed with low inflation rates which will support
consumption.'
ALEXANDER KOCH, UNICREDIT (Milan: UCG.MI - news) (after four states)
'With the strong rise in the oil price in past months,
heating oil and energy prices have clearly pointed upwards.
Against this, gas prices have fallen further. The other
components don't really show much, besides a persistent
downwards trend in food prices. For the annual rate, this means
they are moving towards zero and aren't as deep in negative
territory compared with September.
'The cushioning base effect from oil prices is waning. In
annual comparison, raw material was already more expensive in
October. This should continue in November and December and drive
annual inflation clearly above zero. By year's end we could even
hit the one-percent marker.'
BACKGROUND
The six states' weights in the preliminary consumer price
index vary depending on their correlation with past national
data. The states' weights in the final consumer price index,
always released around two weeks after the preliminary data, are
fixed as follows: North Rhine-Westphalia 23.5 percent, Bavaria
15.4 percent, Baden-Wuerttemberg 13.5 percent, Hesse 7.3
percent, Saxony 4.6 percent, Brandenburg 2.7 percent.
Keywords: GERMANY INFLATION/
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