German annual inflation likely resisted falling into negative territory in June, data today suggested, as prices in the country's most populous state edged up.
Data from the state of North Rhine-Westphalia, home to the cities of Duesseldorf, Dortmund and Cologne, showed annual inflation remained at 0.1 per cent. On a month-on-month basis, prices rose 0.3 per cent.
Prices from German states provide the first insight into trends across the euro area, where inflation came to a standstill for the first time in May.
Analysts had expected German prices would begin falling in June as the financial crisis and the unwinding of last year's jump in commodity prices knock costs, but Friday's data suggested prices are showing tougher-than-expected resistance.
A Reuters poll last week had forecast German CPI would rise by 0.2 per cent month-on-month in June and fall by 0.1 per cent on the year. The EU-harmonised index (HICP) was predicted to rise by 0.2 per cent on the month and fall 0.2 per cent on the year.
Germany, the euro zone's biggest economy, is facing its deepest post-war recession this year. The government expects a contraction of 6 percent of gross domestic product (GDP) - a far deeper recession than in any other year since World War Two.
The European Central Bank has said the euro zone could see a short spell of falling prices over the next few months, although it will only be a temporary phenomenon and not lead to a sustained spell of deflation.
Reuters