|
|
Enron Mail |
Mime-Version: 1.0
Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Holger.Fahrinkrug@ubsw.com X-To: harora@ect.enron.com X-cc: X-bcc: X-Folder: \HARORA (Non-Privileged)\Arora, Harry\Deleted Items X-Origin: Arora-H X-FileName: HARORA (Non-Privileged).pst *** PDF version incl. charts is attached *** German inflation falls more strongly than expected Nov 01 Actual UBSW fc Market Previous CPI - mom% -0.2 0.0 0.0 -0.3 CPI - yoy% 1.7 1.9 1.9 2.0 n German CPI inflation dropped from 2.0% in October to 1.7% in the month to mid-November. Thi swas 0.2%pts lower than expected. The outcome is a consequence of sharply falling energy and food prices. Core inflation will have remained unchanged. Pipeline inflation indicators released yesterday underpinned the favourable trend. n In the absence of further oil price decline, inflation is likely to rise slightly next month. Further significant declines are expected from February 2002, taking German inflation below 1% by the middle of the year. If this is only partly mirrored in other euro area economies, the ECB will have leeway to cut rates further next year as we expect. Food and energy prices were the main forces behind the inflation decline in November. From the state data, we estimate that food price inflation will have fallen from 6.6% to about 5.5% yoy. Household energy prices dropped by about 1.6% mom reflecting a substantial heating oil price decline and petrol prices fell between 0.8% and 3.4% in the reporting states. Core inflation will barely have changed from last month's 1.8%. The favourable German inflation picture was preceded by much larger than expected declines in October produce r and import prices reported yesterday. Altogether, the data of the last two days underpin our forecast that both headline and core inflation will fall substantially next year. Hence, our forecast of further ECB easing in 2002 Q1 remains firmly in place. _______________________________________________ Holger Fahrinkrug Senior Economist UBS Warburg AG Stephanstra?e 14-16, D-60313 Frankfurt, Germany Tel. +49 69 1369 8280 Fax +49 69 1369 8221 Email: holger.fahrinkrug@ubsw.com
|