BERLIN, Sept 22 - German inflation likely eased slightly in September, helped by lower fuel prices and a drop in holiday costs as the summer vacation drew to a close. Economists polled by expect consumer prices to have fallen by 0.1 percent month-on-month, with the year-on-year rise seen at 1.1 percent, the same as in August . Six major German states are due to publish consumer price figures from Tuesday and along with price data from Italian cities will provide a first glimpse of euro zone inflation developments in September. Data last week showed the annual inflation rate in the 12-nation euro zone hit a four-month high of 2.1 percent in August, above the European Central Bank's two-percent ceiling.
But economists said lower crude oil prices should have helped push down prices in September. "There were a couple of dampening factors in September: petrol prices, for instance, fell sharply, while package holiday prices should also have had a clear downward effect," said Thomas Hueck, an economist at HypoVereinsbank, who forecast prices fell 0.2 percent month-on-month, bringing the annual inflation rate down to 1.0 percent. At 0925 GMT, November Brent was trading at $25.11, just above a four-month low of $25.10 hit on Friday. Crude prices have fallen almost 15 percent since the end of August, as fears eased over a summer gasoline crunch in the United States. Hueck said that price developments in September were hard to gauge after an expected food price hike due to this summer's drought failed to materialise in July and August.
Stephan Rieke, an economist at ING BHF-Bank, said food price developments were still a great uncertainty. "Food prices will be a wild card," Rieke said, although he said that higher wholesale prices had not yet fed into the price of individual food products. Analysts at Commerzbank noted that inflation would see little movement as long as economic weakness persisted, with the strong euro and strong competition limiting the scope for price hikes. "Price pressure remains weak and won't pick up until mid-2004 at the earliest," the bank said in a research note. It forecast that prices fell 0.2 percent on the month, bringing the annual rate of inflation down to 1.0 percent.//