German states point to inflation uptick

BERLIN: Annual headline inflation was unchanged or higher in five German states in June, data showed on Tuesday, giving the European Central Bank no reason to dampen expectations it will raise interest rates next week.

Data for six German states are used to calculate a preliminary inflation figure for Germany, which is due later on Tuesday and is forecast to show prices rose 2.3 percent year on year and 0.1 percent month on month, according to a Reuters survey.

STEPHAN RIEKE, BHF-BANK

"It looks like upward pressure on prices is easing. Inflation in Germany seems likely to be stabilising at around 2.3 percent. The dynamic has declined somewhat because energy prices have eased. Food and clothing prices have declined month over month more than usual. "I don't see any new price pressures, at least not from energy. Inflation might rise to perhaps 2.5 percent in July but after that things should calm down."

ANDREAS REES, UNICREDIT

"We've seen a rather strong increase in prices of package tours as a result of a late Pentecost holiday and start to the holiday season in some states.

"The inflation rate will near 3 percent after the summer at the latest as companies are using the chance to pass prices onto consumers. Budgetary leeway has grown larger because of strong growth and record employment.

We still can't signal the all-clear for inflation and so the ECB will raise interest

Copyright Reuters, 2011