German Wholesale Inflationary Pressures Build in February, Delivering EUR Support

After some impressive Philly FED Manufacturing numbers from the U.S on Thursday, wholesale inflation figures from Germany were in focus this morning.

Wholesale Inflation

In February, the annual rate of wholesale inflation accelerated from 0.9% to 1.9%. Economists had forecast an annual rate of wholesale inflation of 2.0%.

Month-on-month, the producer price index rose by 0.7% in February, which was in line with forecasts. In January, the producer price index had risen by 1.4%.

According to Destatis,

• Significant price increase on intermediate goods, especially regarding secondary raw materials and metals drove prices higher.
• Prices of intermediate goods increased by 3.8% compared with February 2020. This was the highest year-on-year price increase since November 2017.
• Secondary raw material prices surged by 46.6% year-on-year in February, with prices of non-ferrous metals up 11%.
• Energy prices increased by 3.7% year-on-year and by 1.3% month-on-month. The increase was as a result of a 6.8% jump in electricity prices and the introduction of CO2 pricing in January 2021.
• Prices of durable consumer goods increased by 1.4%, year-on-year, with prices for capital goods up 0.8%.
• A fall in prices for pork, however, led to a decline in non-durable consumer goods prices.

Market Impact

Ahead of today’s stats, the EUR fallen to a current day low $1.19019 before finding support.

In response to wholesale inflation figures, the EUR rose from $1.19253 to a post-stat high and current day high $1.19372.

At the time of writing, the EUR was up by 0.12% to $1.19292.

Next Up

Retail sales figures from Canada in what’s a quiet day on the U.S economic calendar. We don’t expect these numbers to influence the European majors, however.

There are no U.S stats to provide the markets with direction, leaving yields in the driving seat.