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Economy in Brief

German CPI has largest 12-Month rise in 2 years,  due to energy, government-regulated sectors
by Carol Stone June 9, 2004

Germany's CPI picked up in May, driving mainly by higher energy prices, particularly gasoline. The year-on-year rate was 2.0%, up from 1.6% in April and the strongest advance since March 2002. The impact of energy is seen in the Bundesbank's seasonally adjusted series that excludes energy, which did not accelerate in May and, in fact, was virtually flat on a month-to-month basis.

Another influential aspect of Germany's consumer pricing structure is government- regulated prices, and these too have boosted the CPI this year. These prices as a group were hiked 3.2% in January, the largest boost since 1993. Health care costs were apparently the prime mover, along with elementary education expenses. Tobacco prices were raised in March.

Otherwise, private market prices remain soft. Household furnishings, apparel and transportation costs (excluding fuel) have all remained steady or even weak.

This mixed pattern suggests that true inflationary pressure has not yet developed in Germany. Factors largely external to domestic market forces are pushing up some prices, but those that are flexible seem to be staying down, offsetting at least some of the impact of the managed price hikes.

% Changes May 2004 Apr 2004 Mar 2004
2003 2002 2001
Total (SA) 0.2 0.3 0.4 -- -- --
  Yr/Yr (NSA) 2.0 1.6 1.1 1.1 1.2 1.6
Total Ex Energy (SA) 0.0 0.2 0.4 -- -- --
  Yr/Yr (SA) 1.6 1.6 1.3 1.2 0.7 2.0
Total Ex Energy & Gov't Regulated Prices, Yr/Yr (NSA) 0.8 0.8 0.8 0.8 0.8 1.7
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