German Consumer Prices Hold Falt in August

The final CPI reading for Germany showed prices grew 0.2% in August, with the headline reading for inflation holding flat from the previous year, and price pressures are likely to remain subdued throughout the second-half of the year as Bundesbank President Axel Weber anticipates economic activity to remain weak going into the following year. The breakdown of the report showed prices for clothing and shoes rose 2.5% during the month, with transport costs increasing 1.7% as crude oil prices more than doubled since February, while food prices slipped 1.1% from July. The data reinforces the dovish outlook held by the European Central Bank as they anticipate a negative inflation rate in the second-half of the year, and the Governing Council is likely to hold the benchmark interest rate at the record-low of 1.00% going into 2010 as the outlook for future growth remains weak.