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German states point to inflation easing in September
September 26, 2012 / 11:52 AM / 5 years ago

German states point to inflation easing in September

BERLIN (Reuters) - German consumer price inflation looks set to slow in September and return to the European Central Bank’s euro zone target of just under 2 percent, based on data which showed price pressures easing in five out of six states.

Annual inflation eased to 1.6 percent from 1.9 percent in August in North Rhine-Westphalia (NRW), Germany’s most populous state and a bellwether for the national inflation rate, regional data showed.

Year-on-year inflation rates also slowed in Hesse, home to Germany’s financial capital Frankfurt, Bavaria and the eastern states of Saxony and Brandenburg, data from the states’ statistics offices showed on Wednesday, as pressure on food and travel prices eased.

Pan-German consumer price data, due out at 1200 GMT, is expected to show inflation slowing to 2.0 percent in September from 2.1 percent in the previous month, according to a Reuters poll of 36 economists.

In Hesse, consumer prices rose 2.0 percent in September after climbing 2.3 percent in the previous month, well above the ECB’s target. Inflation in Bavaria remained above that target, although it slowed to 2.3 percent from 2.5 percent. In Saxony, it eased to 2.0 percent from 2.1 percent, while in Brandenburg, it also eased slightly to 1.9 percent from 2.0 percent.

For much of last year Germany’s inflation rate remained consistently above the price stability target of just under 2.0 percent for the euro currency area. It eased below it in May, giving the ECB more scope to loosen policy as the euro zone crisis drags on, but then regained momentum again in August on higher energy prices.

The regional figures suggest Germany’s overall preliminary inflation, due out later on Wednesday, is likely to slow in September. The national figure is based on data from six out of 16 states that together account for more than half of Germany’s population.

Baden-Wuerttemberg was the only one of the six states which saw accelerating inflation, with consumer prices rising 2.0 percent in September compared with a 1.8 percent gain in the previous month.

The government in Berlin and the Bundesbank have both hinted they would tolerate higher prices as long as euro-wide inflation remains under control. That could help ailing euro zone countries boost their competitiveness.

A measure of pan-German inflation based on Europe’s harmonized index of consumer prices (HICP), favored by the ECB, is forecast to slow to 2.1 percent on the year from 2.2 percent in August, according to a Reuters poll of economists.

Reporting By Sarah Marsh, editing by Gareth Jones

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