German inflation rate down to 0.9 percent

BERLIN (AP) - Germany's year-on-year inflation rate has slipped to 0.9 percent this month, helped downward by declining gas prices, authorities in Europe's biggest economy estimated Monday.

The annual inflation rate was down from 1.2 percent in May. Consumer prices were up 0.1 percent on the month in June, the Federal Statistical Office estimated.

Final June inflation figures are due on July 9 but they rarely differ significantly from the preliminary estimate.

Annual consumer price inflation in Germany has hovered within sight of the 1 percent mark for the past few months, fueled largely by year-on-year increases in oil prices. The statistical office said gas prices counterbalanced that in June.

Andreas Rees, an economist at UniCredit, observed that "German inflation is dead as a doornail" - which he described as "remarkable" given the euro's sharp decline against the dollar in recent months.

A weaker euro could be expected to make imported goods more expensive. However, Rees said that "weak domestic demand does not allow companies to pass on higher costs to Mr. Average Citizen."

Rees said he expects neither significant upward pressure on prices nor a move into deflation in the next few months, predicting that the inflation rate for 2010 as a whole will be 1.1 percent.