BERLIN, Sept 24 - German inflation in September was seen unchanged at 1.1 percent year on year after five states reported consumer prices easing 0.1 percent on the month. The states of North Rhine-Westphalia, Baden-Wuerttemberg and Brandenburg all reported on Wednesday that prices eased 0.1 percent month on month, echoing data on Tuesday from the west German states of Bavaria and Hesse.
"It's exactly in line with what we expected," said Holger Schmieding of Bank of America, which had forecast inflation would remain unchanged in September at 1.1 percent year on year. Germany's federal statistics office said it would release a preliminary pan-German inflation number later on Wednesday after data due at 1100 GMT from Saxony, the last of six states to report data used to calculate the initial pan-German figure. Analysts polled by prior to the states' data forecast pan-German consumer prices falling 0.1 percent on the month, for a year-on-year inflation rate of 1.1 percent , unchanged from August. The German data follows figures from Italian cities suggesting consumer prices rose by 0.2-0.3 percent on the month and by 2.8-2.9 percent year-on-year in September, giving a first glimpse of inflation trends in the euro zone for the month. Euro zone inflation rose to a four-month high of 2.1 percent in August. European Central Bank officials have said they expect inflation to hover around its two percent tolerance threshold this year before dipping under that level in 2004.
The German and Italian data showed seasonal food prices to be a modest driver of inflation after what German meteorologists estimate was Europe's hottest summer in 500 years. German telecommunications prices also rose as basic charges for fixed line and mobile services rose. However, in Germany the increases were offset by falling energy prices. "We think euro zone inflation will also be unchanged (in September). On balance we can say that inflation is stickier than most people expected some months ago," Bank of America's Schmieding said. "It is another argument for the ECB not to cut interest rates again," he added.//