Wednesday, May 14, 2008

German Inflation April 2008

As reported by the Federal Statistical Office (Destatis), the consumer price index for Germany rose 2.4% in April 2008 on April 2007. Compared with March 2008, the index was down 0.2%. In March 2008, the year-on-year rate amounted to +3.1%. The estimate for April 2008 based on the results from six Länder was thus confirmed.

The harmonised consumer price index (HICP) for Germany, which is calculated for European purposes, rose 2.6% in April 2008 on April 2007. Compared with the previous month, the index was down 0.3%. The HICP estimate of 28 April 2008 was thus confirmed.

The relatively low year-on-year rate of price increase in April 2008 is due to two special influences: Compared with a year earlier, prices decreased especially for package holidays (−7.4%) and accommodation services (−0.4%). This is mainly attributable to the early Easter holidays in March 2008; in 2007, Eastern was in April (calendar effect). In education, the introduction of tuition fees in some Länder a year ago (April 2007) for the first time did no longer have any influence on the rate of price increase (basis-related effect). Each of those two effects leads to a reduction of the year-on-year rate of price increase by 0.2 percentage points.

The year-on-year rate of price increase is characterised mainly by higher prices of mineral oil products. Despite the strong euro, the world market prices of crude oil are further rising. Not considering the price trend for mineral oil products, the rate of price increase would have been just 1.7%. Motor fuel prices were up 8.8% on a year earlier (including supergrade petrol: +5.8% and Diesel fuel: +17.2%). Liquid fuel prices climbed 38.9% and hence saw the highest increase on the previous year. The prices of the other household energy sources, too, rose considerably on a year earlier (including electricity: +7.3%; gas: +3.6%; charges for central and remote heating: +3.4%).

Prices of food and non-alcoholic beverages increased an average 7.1% in April 2008 compared with April 2007 (of which food: +7.3% and non-alcoholic beverages: +6.0%). As in the previous months, unusual price rises were observed for milk, cheese and eggs (+24.0%; including curd: +47.2% and full-cream milk: +31.0%) as well as for oils and fats (+16.7%). Consumers had to spend more than a year earlier also for fruit (+9.7%) and for bread and cereals (+8.8%; including pasta: +26.6%). Prices were down, however, for vegetables (–5.2%; including potatoes: −11.2%; tomatoes: −19.4% and salad: −23.8%).

The 0.2% price decrease on March 2008 is due to opposite price trends. In April 2008, seasonal month-on-month price decreases were observed especially for travels (including package holidays: −13.4%; accommodation services: −6.0% and air travels: −4.3%). However, especially prices of liquid fuel rose markedly (+4.1%). Food prices were up a total 0.4% on the previous month, including especially vegetables (+1.1%). Seasonal price rises were observed, among other things, for potatoes (+4.2%) and peppers (+7.8%), whereas prices were markedly down for cucumbers (−20.9%). There were opposite price trends also for other food: Prices were again down in April 2008, for example, for butter (−2.9%), while margarine prices were up (+6.0%). The prices of milk products (+0.3%) and of bread and cereals (+0.4%) rose only slightly on the previous month.

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