German Inflation Accelerates on Energy Prices and Easter Holiday
12.05.2009 (09:45)
German
April CPI inflation was confirmed at 0.0% m/m and 0.7% y/y, up from
0.5% y/y in the previous month. Heating oil and petrol prices rose over
the month, and the base effects in the annual comparison was less
positive than last month. On the other hand gas prices dropped sharply
over the month. Energy prices aside, the later timing of Easter this
year also had an effect, with holiday related jumping higher in the
annual comparison. With gas prices now following oil lower, the annual
rate for overall household energy has turned negative for the first
time, and prices dropped 0.1% y/y, compared to a rise of 13.8% y/y at
the peak in October last year. Excluding household energy and petrol
prices are up 1.4% y/y, nearly double the headline rate, but still
firmly below the ECB's 2% limit for price stability. The headline rate
is likely to dip below zero later in the year, but with base effects
likely to turn negative again, this should be a temporary decline and
we agree with the ECB that the risk of lasting deflation is contained
for now, even though officials need to keep a close eye on inflation
expectations.
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