Germany's inflation rate slows in May, but officials say there's still no risk of deflation; VW scores hit in Germany with Spanish cars; and though the economy is stagnant, there are still more millionaires than ever.
The stronger euro has slowed inflation by making energy products cheaper.
German inflation rate dips Falling gas and heating oil prices in May contributed to Germany's lowest inflation rate since October 1999. The inflation rate fell from 1.0 percent to 0.7 percent during the month, the Federal Statistical Office reported on Wednesday. Without volatile energy prices, the inflation rate stayed almost the same, the office said. But oil and gas weren't the only commodities in Germany that recorded price drops -- grocery prices were down 0.8 percent and prices for computers and accessories also dropped. Speaking at a directorial meeting in Potsdam on Wednesday, German Central Bank President Ernst Welteke said he predicted the average inflation rate for 2003 would fall under 1.0 percent. Though "disappointed" by current economic developments, Welteke said there are no signs Germany is threatened by deflation, when prices overall drop.
VW's Spanish subsidiary SEAT sees surging sales
Despite declining auto sales overall, Volkswagen's Spanish subsidiary, SEAT, on Wednesday reported an increase in car sales in Germany. During the first four months of the year, the company's German sales jumped 9.4 percent, for a total of 18,700 cars. In 2002, the company saw its sales grow by five percent, with 51,000 units moved. SEAT Germany CEO Peter Maiwald attributed the growth to sinking prices and a restructuring of the company's dealerships. Last year, the company dropped its prices by an average of four percent. SEAT's cars are increasingly popular in Germany because they are built using the same chassis as popular Volkswagen models and are sold at much-cheaper prices.
Flying high in tough times
Despite the country's recent economic woes, there were more millionaires in Germany in 2002 than ever before. As many as 755,000 Germans had financial assets exceeding $1 million -- meaning they had plenty of cash on hand for Porsches, Hugo Boss and other homegrown luxury brands, Merill Lynch and Cap Gemini Ernst & Young found in a joint study released in Frankfurt on Wednesday. In 2001, there were 730,000 millionaires in Germany.
Rewe goes on shopping spree
Cologne-based retailer Rewe said on Wednesday it would acquire the Bon Appetit Group, Switzerland's third-largest supermarket chain. Rewe, which trails just behind France's Carrefour and Germany's Metro as the third-largest supermarket operator in Europe, said the purchase would increase its annual foreign revenues to just over €10 billion ($11.75 billion). That would bring global revenues for the company, which operates in 12 European countries, to €39 billion a year.
Cash strapped Berlin bank sells subsidiary
The logo of Bankgesellschaft Berlin
The beleaguered Bankgesellschaft Berlin, a bank 81-percent owned by the city-state, on Wednesday agreed to sell its consumer credit subsidiary to General Electric. GE's GE Capital Corporation agreed to acquire 99.82 percent of Allgemeinen Privatkundenbank AG (Allbank) in a deal the company valued at €182 million. Bankgeselleschaft sought to sell the company to the Royal Bank of Scotland in Dec. 2002, but the deal fell through at the 11th hour, threatening to plunge Allbank into insolvency. Wednesday's sale is part of a restructuring bid aimed at putting the bank back on track. Bankgesellschaft has served as a serious financial burden to the city of Berlin, which was forced to bail out the company's bad property loans in recent years to the tune of €1.75 billion.
Compiled with information from wire services.