German Producer Prices Down 3.3% Year-on-Year in April vs. 2.9% in March

On Tuesday (May 21), producer prices from Germany warranted investor attention amidst rising investor bets on a June ECB rate cut.

German Producer Prices

German producer prices were down 3.3% year-on-year in April after falling 2.9% in March. Economists expected producer prices to decline by 3.2%.

However, producer prices increased by 0.2% month-on-month in April after advancing by 0.2% in March.

According to Destatis,

• Energy prices continued to impact headline year-on-year price trends, falling 8.2%. Compared with March 2024, energy prices declined by 0.1%.
• Natural gas and electricity price trends had the most marked impact on the year-on-year decline in energy prices.
• Mineral oil product prices increased 2.1% year-on-year in April. Heating oil prices were up 9.7%, with motor fuel prices 2.6% higher.
• Compared with March 2024, heating oil prices advanced 1.9%, with motor fuel prices jumping 2.5%.
• Excluding energy prices, producer prices were down 0.6% year-on-year in April while up 0.3% compared with March 2024.
• Prices for intermediate goods declined by 3.1% year-on-year while rising by 0.3% month-on-month.
• Capital goods prices increased 2.4% year-on-year. Costs for machinery and prices for motor vehicles, trailers, and semi-trailers were up 2.8% and 1.7%, respectively.
• Non-durable consumer goods prices advanced by 0.3% year-on-year despite food prices declining 0.4%.
• Prices for durable consumer goods increased 1.0% year-on-year.

EUR/USD Reaction to German Wholesale Prices

Before the German producer price report, the EUR/USD rose to a high of $1.08620 before falling to a low of $1.08509.

However, in response to the producer price numbers, the EUR/USD climbed to a high of $1.08605 before falling to a low of $1.08568.

On Tuesday, the EUR/USD was flat at $1.08570.

Up Next

Later in the European session, trade data and labor cost figures for the Eurozone will warrant investor interest. Economists forecast the trade surplus to narrow from €23.6 billion to €19.9 billion in March. Moreover, economists predict labor costs to increase 2.9% year-on-year in Q1 2024 after advancing 3.4% in Q4 2023.

Softer labor costs and downward trends in producer prices could fuel investor speculation about a post-June ECB rate cut.

During the US session, FOMC member commentary needs monitoring. FOMC members Raphael Bostic, Michael Barr, Thomas Barkin, John Williams, and Christopher Waller are on the calendar to speak. Views on inflation and the timing of a Fed rate cut could influence buyer demand for the US dollar.