BERLIN, June 26 - German import prices fell in May by a bigger-than-expected 1.4 percent month-on-month, with the strong euro increasing the impact of a slump in oil prices, data showed on Thursday. The Federal Statistics Office said import prices were 3.8 percent lower than a year ago. The declines were even sharper than the consensus forecast for falls of 0.5 percent month-on-month and 3.1 percent year-on-year. Analysts said the data showed that a recent fall in German inflation was due to a decline in the price of oil and the strong euro, which makes imports cheaper, rather than an overall deflationary trend. The euro is currently trading at around $1.15, having hit a four-year high against the dollar in May, and is seen remaining strong for some time. "Import prices fell sharply even excluding oil prices, indicating that the strong euro was also a factor," said Ulrike Kastens, an economist at Sal. Oppenheim bank in Cologne.
The Office said there was a 10.3 percent decline in the price of mineral oil products in May compared with April, with the price of diesel fuel and light heating oil down 10.7 percent. Year-on-year, mineral oil products were 14.0 percent cheaper. Excluding oil, May import prices were 0.9 percent lower month-on-month and down 2.7 percent year-on-year, the data showed. "What we're experiencing is disinflation, not deflation," Kastens added. German consumer price data for June, published this week, allayed fears the country was slipping into a deflationary spiral. Preliminary data showed consumer prices rose 0.3 percent month-on-month, taking the annual rate of inflation to 1.0 percent.//