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Economy in Brief

German: HICP Moderate But Accelerating
by Robert Brusca February 9, 2010

Germany’s HICP and domestic CPI show modest inflation in Germany but headline inflation is still in a steady upward progression. Since the headline rate for the HICP is only 0.7% that is not disturbing at all. The HICP core is not yet available but the domestic German CPI measure shows core inflation at 0.8% Yr/Yr and yet dropping at a pace of 0.8% over the most recent three months. Domestic inflation shows modest diffusion. Inflation is accelerating over six months in only 54% of the categories and inflation is accelerating over three-months in only a bit more than one-quarter of the categories.

Germany, a big part of the e-zone and its inflation measure, shows inflation pressures are still contained but not entirely dormant. At this point that is good news since we want inflation to stay under control but we do not want it so docile that the economy appears to lack any life. The economy needs to make a recovery so the existence of some price pressure is a good signal, too.

Germany has a mixed mission. It is to keep inflation under wraps and still to generate recovery. The German CPI and HICP seem consistent with those goals.

German HICP and CPI details
  Mo/Mo % Saar % Yr/Yr
  Jan-10 Dec-09 Nov-09 3-Mo 6-Mo 12-Mo Yr Ago
HICP Total 0.1% 0.1% 0.2% 1.5% 1.7% 0.7% 0.9%
Core #N/A 0.2% -0.1% #N/A #N/A #N/A 1.2%
CPI
All -0.1% 0.2% 0.1% 0.7% 1.1% 0.8% 0.9%
  CPIxF&E -0.3% 0.1% 0.0% -0.8% 0.0% 0.8% 1.2%
Food 0.5% -0.1% 0.4% 2.9% -0.5% -1.3% 1.0%
Alcohol 0.1% 0.1% -0.1% 0.4% 1.1% 3.6% 1.9%
Clothing & Shoes -1.9% 2.2% -1.3% -4.2% 2.8% 0.3% 1.0%
Rent &Util 0.1% 0.1% 0.0% 0.7% 0.7% -0.3% 2.4%
Health Care -0.3% 0.1% 0.1% -0.4% 0.2% 0.9% 0.9%
Transport 0.5% 0.2% 1.4% 8.7% 10.0% 4.6% -2.7%
Communication -0.3% -0.2% -0.3% -3.5% -2.0% -1.9% -3.0%
Rec &Culture -0.5% 0.0% -0.5% -3.9% -1.8% 0.1% 1.2%
Education 0.1% 0.5% 0.8% 5.9% 4.6% -1.5% -4.3%
Restaurant& Hotel 0.1% 0.5% 0.1% 2.6% 2.0% 1.5% 3.1%
Others -0.7% 0.3% -0.3% -2.9% 0.7% 1.3% 1.4%
Diffusion   27.3% 54.5% 36.4%  --
Type: Diffusion: Current Compared to 6-mo 12-mo Yr-Ago --
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