German state data points to benign but higher-than-forecast inflation
BERLIN, July 30 (Reuters) - German annual inflation will probably come in above the 1.7 percent forecast for July but remain below the European Central Bank's euro zone target, data from four federal states suggested on Tuesday.
Inflation in Germany has remained below the ECB's target of close to but just below two percent this year after spending much of last year above it. Economists do not expect it to move above that threshold this year, with a Reuters poll earlier this month predicting an inflation rate of 1.5 percent for 2013 as a whole.
Consumer price inflation is expected to ease to 1.7 percent on the year in July from 1.8 percent in June, according to the consensus forecast in a Reuters poll of economists conducted before data from the states was released.
In North Rhine-Westphalia (NRW), Germany's most populous state and traditionally a bellwether for the national data, the cost of living rose by 2.1 percent on the year in July, largely due to higher education, food and leisure costs.
But consumer prices have risen more sharply in NRW than in Germany as a whole for the last two months.
Other states showed 1.7, 1.8 and 2.0 percent increases in the cost of living on the year in July.
"NRW was a bit higher than the ECB's target but the others weren't... so I don't think German inflation will exceed two percent this year," said Heinrich Bayer, economist at Postbank.
"There's nothing really driving prices to the extreme - not energy costs, raw material costs or wage costs - so the price climate remains very stable," he said, adding that data from states pointed to a 1.8 percent annual increase in consumer prices in July, higher than his original 1.7 percent estimate.
Pan-German inflation figures are due out at 1200 GMT.
(Reporting by Michelle Martin Editing by Jeremy Gaunt)