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Inflation Quickens in Three Federal States as Prices for Energy Increase
Inflation in three German states accelerated in July after energy prices rose.
In Brandenburg the inflation rate increased to 1.1 percent from 0.8 percent in June, in Hesse it rose to 0.9 percent from 0.5 percent and in Saxony to 1.2 percent from 1 percent, the states’ statistics offices said today.
Economists predict German inflation, calculated using a harmonized European method, will quicken to 1.1 percent from 0.8 percent, according to a median of 18 estimates in a Bloomberg News survey. That report, based on reports from six states, is due later today.
Crude oil prices are 15 percent higher than a year ago, nudging inflation just as a weaker euro pushes up the cost of imported goods. In June, import prices jumped an annual 9.1 percent, the most in a decade. At the same, uncertainty about the economic outlook and concerns about Europe’s sovereign debt crisis may weigh on consumer demand, limiting companies’ ability to raise prices.
“The rise of the inflation rate is a base effect, reflecting a drop in oil prices in July 2009,” said Klaus Schruefer, an economist at Frankfurt-based SEB AG. “The rate will fall below 1 percent in August and stay there for the rest of the year.”
Heating Oil, Food
In Saxony, heating oil was 24 percent more expensive in the year and fresh food prices were up 9.9 percent. In the month, consumer prices rose 0.2 percent as the summer pushed up the cost of package tours and holiday accommodation.
The European Central Bank aims to keep inflation just below 2 percent. It has kept its benchmark interest rate at a record low of 1 percent since May 2009.
“There will be no conflict with the set targets of the ECB, we don’t have to fear inflation rates above 2 percent,” said Jens Kramer, an economist at NordLB in Hanover. “German inflation will remain below the euro-zone average.”
The ECB in June predicted inflation in the 16-nation euro region will average 1.5 percent this year and 1.6 percent in 2011. The rate will rise to 1.7 percent this month from 1.4 percent in June, according to another survey of economists. That report is due from the European Union’s statistics office in Luxembourg on July 30.
Monthly Yearly
Change Change
Baden-Wuerttemberg n/a% (0.1%) n/a% (1.0%)
Bavaria n/a% (0.1%) n/a% (0.9%)
Brandenburg 0.3% (0.1%) 1.1% (0.8%)
Hesse 0.3% (0.0%) 0.9% (0.5%)
North Rhine-Westphalia n/a% (0.0%) n/a% (0.7%)
Saxony 0.2% (0.1%) 1.2% (1.0%)
To contact the reporter on this story: Simon Berberich in Frankfurt sberberich@bloomberg.net
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