BERLIN, July 25 - Prices in the east German state of Saxony rose 0.2 percent month on month in July, adding to a picture of stable inflation in Germany despite a seasonal rise in the cost of holiday homes and package tours. Saxony was the last of six German states to report consumer price data for July. Together with the other states' data, it suggested preliminary pan-German inflation also due on Friday would be close to June's 1.0 percent level.
"Germany's July consumer price index probably rose by 0.2 percent or 0.3 percent month-on-month. In year-on-year terms this would be an inflation rate between 0.9 percent and 1.0 percent," said Invesco Asset Management economist Joerg Kraemer. As in other states, Saxony consumer prices were driven by seasonal price rises for tourism and leisure activities. The cost of holiday homes rose 30 percent month on month, offsetting a slight fall in hotel and bed and breakfast room prices. Food and alcohol prices fell 0.9 percent month on month, their first decline since October 2002, again showing an expected spike in food prices due to drought-like conditions in much of Europe has not yet materialised. German inflation fell sharply earlier in the year, leading to fears that Europe's largest economy could be heading towards deflation. But those fears have eased as oil prices have picked up again following the war in Iraq and as inflation has stabilised.
The Federal Statistics Office earlier reported German import prices in June fell less than economists expected, adding to a picture of easing downward pressure on inflation in the euro zone's largest economy. Compared with May, June import prices fell 0.1 percent and were 2.7 percent below year earlier levels. Analysts polled by had on average forecast a month-on-month decline of 0.5 percent for a year-on-year drop of 3.1 percent . The statistics office said strong monthly import price falls were recorded for apples, bananas and coffee. In contrast, mineral oil products rose 4.0 percent month on month and crude oil was 3.0 percent more expensive. Excluding oil prices, import prices declined 0.4 percent month on month and by 2.4 percent year on year, it said.//