German Producer Prices Slide in March but Remain Elevated Annually
It is a busy day on the European economic calendar. This morning, German producer price figures kickstarted the European session.
The German Producer Price Index slid by 2.6% in March versus a forecasted 0.5% decline. In February, the Index declined by 0.3%. Despite the monthly fall, producer prices of industrial products were up 7.5% compared with March 2022.
According to Destatis,
- Energy prices were up 6.8% compared with March 2022, with natural gas (distribution) prices (+19.1%) the main contributor.
- There were also marked increases in prices for energy products, capital goods, non-durable consumer goods, intermediate goods, and durable consumer goods.
- However, energy prices also contributed to the March decline in producer prices of industrial goods.
- Non-durable consumer goods prices increased by 15.4% compared with March 2022 and 0.7% compared with February 2023.
- Food prices increased by 19.2% from March 2022 to March 2023.
- Excluding energy, the Index was up 7.9% from March 2022. In March, the Index rose by 0.2%.
On Wednesday, euro area core inflation spooked investors despite the annual inflation rate for the euro area softening from 8.5% to 6.9% in March. Today’s numbers signal a further easing in inflationary pressure. However, food prices remain the bugbear, which should limit the impact of today’s numbers on ECB policy sentiment.
EUR/USD Price Reaction to German Wholesale Inflation
Ahead of the German Producer Price Index figures, the EUR/USD fell to an early low of $1.09470 before rising to a pre-stat high of $1.09622.
However, in response to the PPI numbers, the EUR/USD slipped to a post-stat low of $1.09600 before rising to a session high of $1.09697.
This morning, the EUR/USD was up 0.11% to $1.09682.

Next Up
Euro area trade data and Eurozone consumer confidence will also move the dial later in the session.
With inflation being the focal point, the ECB’s monetary policy meeting accounts will also garner interest this afternoon. While the latest inflation figures support a 50-basis point ECB interest rate hike in May, investors will look for guidance beyond May, with core inflation a likely focal point.
With the ECB monetary policy meeting minutes due, investors should monitor ECB commentary today. ECB President Christine Lagarde and ECB Executive Board member Isabel Schnabel are on the calendar to deliver speeches today.
Comments relating to the euro area CPI report and ECB monetary policy will move the dial.
It is also a busier day on the US economic calendar. Philly Fed Manufacturing Index figures for April and the all-important US jobless claims numbers will be in focus.
After a quiet first half of the week, we expect increased market sensitivity to the stats. Inflation and labor market components of the Index will draw interest alongside the jobless claim figures. Deteriorating labor market conditions could test the theory of a post-May Fed interest rate hike.
However, FOMC member commentary will also influence. FOMC members Waller and Bowman will deliver speeches overnight.