German inflation remained subdued in September as the economic downturn lumbered on, according to preliminary regional figures released today. Consumer prices fell 0.1pc on the month in the west German states of Bavaria and Hesse, the first of six German states to report price data used to calculate a preliminary pan-German figure expected later in the week. Hesse said that year-on-year inflation held steady at 1.0pc, the same as in August. Bavaria said its year-on-year inflation remained unchanged at 1.3pc. The figures were in line with forecasts for German consumer prices to fall by 0.1pc on the month, for a year-on-year inflation rate of 1 or 1.1pc.
The German data followed figures from Italian cities indicating consumer prices rose by 0.2 to 0.3pc on the month and by 2.8 to 2.9pc on the year in September. Eurozone inflation rose to a four-month high of 2.1pc in August. However, European Central Bank (ECB) officials have said they expect a fall in inflation in the first half of 2004 to below 2pc.//www.fxcentre.com