26 July 2004, 14:30  German inflation ticks up on seasonal factors, oil

German consumer prices rose broadly as expected in July due to seasonal factors and dearer fuels, regional data showed on Monday. Consumer price data released on Friday and Monday from six German states used to calculate a preliminary national inflation estimate showed prices rising between 0.2 percent and 0.4 percent from the previous month. On the year, July inflation among the states rose by between 1.6 percent and 2.2 percent. Economists polled by prior to the data expected pan-German inflation to tick up to 1.8 percent year-on-year from 1.7 percent in June. The states' month-on-month gains were consistent with the mid-range forecast in a poll of 23 analysts for a 0.3 percent month-on-month increase in German consumer prices in July . The Federal Statistics Office is due to release a preliminary national inflation figure for July by around 11:00 GMT on Monday.
The German state data provide a first glimpse at inflation trends in the euro zone in July. Germany accounts for a third of the 12-nation euro zone price index, due to be released on July 30. The monthly increase in the German states' data was led by rises in the cost of package holidays, fuels and healthcare items, partly offset by cheaper food and clothes. Economists were unconcerned about the data, despite the firm month-on-month rise. The pointed out that if seasonal factors, energy prices and the impact of recent government health reforms were stripped out, underlying price pressures in Europe's largest economy remained low. "A 0.3 percent rise on the month is certainly not insignificant but once seasonally adjusted it will be much lower," said Deutsche Bank economist Ulrich Beckmann. "This will not have a direct influence on the European Central Bank." Beckmann said recent moves to lengthen the working week in Germany would likely further ease price pressures. "The current trend towards extending working hours will cut non-wage labour costs and hence we shouldn't have any price pressure on the domestic front in the foreseeable future."///

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