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Economy in Brief

German CPI Trends Remain Tepid
by Robert Brusca September 9, 2010

The German harmonized CPI rose by 0.2% in August and gained 0.9% Yr/Yr. The German domestic inflation measured by its CPI rose by 0.,1% and gained 1% Yr/Yr. The domestic measure posted a core inflation reading of 0.2% and of 0.7% Yr/Yr. Over both three- and six-months this core gauge is rising at a pace of 1.5%.

Inflation is subdued in Germany. Over three- months its diffusion measure for the main 11 components is 0.45 (below 0.50) implying that inflation is falling in more categories than it is rising. Over six months the gauge is a higher 0.727 as inflation did accelerate on that horizon. Over three months inflation is running at a 0.7% pace down from 1.7% over six months and the six-month rate is up from 1% yr/yr. Inflation will always undergo some shifts from period to period. In this case inflation over three-months is back below where it had been over 12-months.

In short there is no evidence of any inflation brewing in Germany at this time. The PPI is not the preferred inflation gauge as it applies to only a small segment of the economy and tends to be volatile dominated by commodity price swings. The upturn in PPI inflation is of no consequence wit the CPI behaving so well.

German HICP and CPI details
  Mo/Mo% SAAR% Yr/Yr
  Aug-10 Jul-10 Jun-10 3-Mo 6-Mo 12-Mo Yr Ago
HICP Total 0.2% 0.1% -0.1% 0.7% 1..3% 0.9% 0.0%
  Core #N/A 0.0% 0.1% #N/A #N/A #N/A 1.2%
CPI
All 0.1% 0.1% 0.0% 0.7% 1.7% 1.0% 0.0%
   CPIxF&E 0.2% 0.1% 0.1% 1.5% 1.5% 0.7% 1.1%
Food -0.3% 0.9% 0.0% 2.5% 3.8% 2.4% -2.7%
Alcohol 0.2% -0.1% -0.4% -1.1% 0.0% 0.2% 3.5%
Clothing & Shoes 1.3% -1.8% 0.1% -2.7% 0.4% 0.3% 1.5%
Rent &Util 0.1% 0.1% 0.0% 0.7% 2.0% 1.2% -0.2%
Health Care 0.2% 0.1% 0.1% 1.5% 0.8% 0.5% 0.8%
Transport 0.7% -0.5% -0.7% -2.1% -0.7% 1.8% -2.0%
Communication 0.0% 0.2% -0.1% 0.5% -0.7% -1.8% -1.5%
Rec &Culture 0.5% -0.1% 0.4% 3.2% 1.6% 0.0% 1.9%
Education 1.9% 0.0% -0.4% 6.0% -3.0% 0.6% -5.1%
Restaurant & Hotel 0.2% 0.0% -0.1% 0.4% 1.5% 1.3% 1.7%
Other 0.5% 0.1% 0.3% 3.4% 3.0% 1.0% 1.7%
Diffusion   45.5% 72.7% 36.4% --
Type: Diffusion: Current Compared to 6-mo 12-mo Yr-Ago --
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