German prices remain flat as inflation hits 22-yr low of zero | Shanghai Daily

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German prices remain flat as inflation hits 22-yr low of zero

INFLATION in Germany, Europe's biggest economy, fell to zero - its lowest in 22 years - in May as manufacturers' revenues dropped and business failures increased, the Federal Statistical Office said yesterday.

The Wiesbaden-based office said consumer price inflation rate fell to zero in May on an annual basis, down from 0.7 percent in April.

That was mainly due to higher energy and food prices in May 2008, but also suggests consumers are buying less, causing retailers to slash prices.

Energy prices fell about 8 percent, while food prices slid 1.2 percent compared to year-ago levels.

In a separate release, the office said revenues in the manufacturing sector fell 23 percent in April over the same month the previous year, as people and businesses curbed spending.

The latest evidence of weakness in the German economy came after the agency reported on Tuesday that exports dropped 4.8 percent in April from March, and were down 28.7 percent from the year before. The fall was the largest since Germany went into recession in last year's third quarter.

The agency said yesterday that the manufacturing sector saw domestic sales in April fall by more than 17 percent, while foreign business fell nearly 30 percent. In the first four months of the year, manufacturing sales fell 22 percent compared with the year-earlier period.

The biggest decline came in the auto and auto parts sector, which saw a decline in April of more than 37 percent over the same month the year before.

The recession contributed to a 10 percent increase in businesses filing for bankruptcy protection during the first quarter.

The Statistical Office said that in the January-March period, German insolvency courts in 15 of the country's 16 states reported about 7,700 business insolvencies compared to about 7,000 in the year-ago period.




 

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