Final HICP
July: +0.4% m/m, +1.9% y/y (revised from +2.0% y/y)
June: -0.2% m/m, +2.0% y/y
Final CPI
July: +0.4% m/m, +1.7% y/y (unrevised)
June: -0.1% m/m, +1.7% y/y
—
FRANKFURT (MNI) – German HICP inflation for July was revised down
below 2%, the weakest annual rise in two years, while preliminary
estimates for CPI inflation were confirmed, the Federal Statistical
Office reported on Friday.
After dipping 0.1% in June, CPI prices rebounded 0.4% on the month,
leaving the annual rate steady at +1.7%. In EU harmonized terms, prices
also rose 0.4% on the month, though the annual rate surprised to the
downside at +1.9%.
With the summer driving season in full swing, motor fuel prices
rose 1.3% in July to give an annual rate of +2.9%. Fueled by costlier
electricity, gas and heating oil, household energy prices were up 1.0%
on the month and 5.3% on the year.
Core CPI, which factors out the impact of household energy and
petrol prices, was also up 0.4% on the month, resulting in an annual
rise of 1.4%.
Brent crude prices have been on an upward trend since mid-July,
hitting three-month highs earlier this week, as the latest data showed a
decline in production out of the North Sea.
Nevertheless, with global demand subdued and base effects still
favourable, upward pressure on the price index from energy should remain
limited.
In its latest forecast report, the Organisation of Petroleum
Exporting Countries saw global demand for oil stabilising over the
current summer driving season.
However, “there is considerable uncertainty surrounding the
forecast for world oil demand growth in 2013,” OPEC said. “Risks are
currently seen to be skewed to the downside.”
Offsetting a modest rise in meat prices, cheaper fruit and
vegetables knocked food prices down 0.8% in July and brought food and
non-alcoholic beverage prices 0.7% lower than in June. In annual term,
food and non-alcoholic beverages were 3.0% more expensive.
Package vacation prices were hiked 14.9% during the vacation month,
resulting in a yearly gain of 5.8%. Boosted by costlier fuel prices,
transport prices managed a 0.6% monthly rise and a 2.1% jump on the
year.
July’s PMI report continued to point to easing pipeline price
pressures, with input cost inflation in the private sector falling to
two-and-a-half-year lows, while average output prices dipped for the
first time since August 2010.
The Ifo institute’s latest business sentiment survey relayed a
similar message, as price expectations fell to multi-month or multi-year
lows in July in retailing, manufacturing and construction, while rising
only slightly from a two-year low in wholesaling.
The latest forecasts out of the International Monetary Fund have EU
harmonized inflation in Germany averaging +2.2% this year and easing to
+2.0% in 2013.
With German annual HICP revised lower, a similar rewrite could be
in the cards for the Eurozone figure as well.
At his press conference last week, European Central Bank President
Mario Draghi reiterated his expectations that Eurozone inflation would
slow further this year from its current 2.4% level and be below 2% in
2013.
“Over the policy-relevant horizon, in an environment of modest
growth in the euro area and well-anchored long-term inflation
expectations, underlying price pressures should remain moderate,” Draghi
said.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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