German February CPI and HICP inflation were confirmed at 1.0% y/y, unchanged from the preliminary number and slightly higher than the 0.9% rate for both readings in January. in January. Prices were up 0.6% m/m in the CPI reading and 0.7% m/m in the EU harmonized HICP reading. The breakdown showed sharp declines in prices for heading oil over the month, but petrol prices rose for a second consecutive month. Services prices as well as prices for leisure education and hotels also rose at the start of the year. Annual rates remain very low and are likely to fall further on base effects in coming months, but we do not see a real deflation risk in the Euro-Zone's largest economy.
Meanwhile, Germany posted a January sa trade surplus of EUR 8.4 bln, down from EUR 11 bln in the previous month. Exports declined 4.4% m/m, while imports decline only 0.8% m/m, dragging down the overall trade balance at the start of the year. The unadjusted trade surplus amounted to EUR 8.5 bln, down from EUR 17.3 bln in January last year and compared to EUR 7.3 bln in December. The sharp decline in exports at the start of the year highlights that Germany is suffering from the slowdown in world growth and the collapse in Eastern Europe. German car exports are deteriorating rapidly and net exports will continue to detract from overall growth this year. With the trade surplus declining sharply, the current account surplus dropped to just EUR 4.2 bln in January, down from EUR 15.6 bln in January last year and versus EUR 12.7 bln in December.
Al Bawaba
