Tame German inflation no worry for euro zone

BERLIN: Rising costs for fuel and seasonal foodstuffs drove German inflation higher as expected in July, data showed on Wednesday, but economists did not see it as a sign of broader price pressures in the euro area.
   The preliminary data from the Federal Statistics Office -- an early sign of price developments in countries that share the euro currency -- showed consumer prices rising 1.1 per cent on an annual basis and increasing 0.2 per cent over the month.
   The annual acceleration of two tenths of a point, which like the monthly figure was in line with Reuters forecasts, was largely due to higher prices for heating oil, fuel, and fresh fruit and vegetables, the statistics office said.
   "There can be no talk of increasing price pressures because once you strip out seasonal effects and volatile energy and food elements and look at core inflation, prices are moving sideways," said Ralph Solveen from Commerzbank.
   A survey released on Tuesday showed consumer sentiment in Germany had risen on World Cup euphoria, warm weather and an improving job market. However, the July inflation data gave no signs this had improved firms' pricing power.
   State data released earlier showed alcoholic drinks -- which could have seen increasing demand from picnickers and soccer fans -- registered a monthly price drop in four out of six states surveyed.
    Germany emerged from its deepest post-war recession in the second quarter of last year and recent indicators suggest the pace of recovery has been accelerating.
   Besides the better-than-expected consumer survey, corporate sentiment leapt by a record margin in July to reach its highest level in three years, the Ifo business climate index showed last week-Reuters