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Germany’s Producer Price Index Points to a Further Pickup in Inflation

By:
Bob Mason
Published: Apr 20, 2021, 09:48 UTC

Wholesale inflation figures from Germany point to a further pickup in inflationary pressure going into the second quarter, which was aligned with recent PMI survey responses.

Depositphotos_2967504_s-2019

In this article:

It’s been a quiet start to the week on the Eurozone economic calendar. After a particularly quiet Monday, wholesale inflation figures from Germany were in focus this morning.

Wholesale Inflation

In March, Germany’s producer price index rose by 0.9% month-on-month, following a 0.7% rise in February. Economists had forecast a 0.6% increase.

Compared with the same month a year earlier, producer prices of industrial products were up by 3.7%. This was the highest increase when compared with the corresponding month of the preceding year since Nov-2011.

According to Destatis,

  • Prices of energy and prices of intermediate products drive the index northwards year-on-year.
  • Energy prices jumped by 8.0% compared with Mar-2020, with prices of intermediate goods up 5.7%.

Taking a closer look at prices of intermediate goods, price for raw materials saw marked increases year-on-year.

  • Prices of metallic secondary raw material surged by 46.8%.
  • There were also marked increases in prices for:
    • Prepared feeds for animals (+15.9%).
    • Sawn and planed wood (+13.9%).
    • Metals (+12.9%) – Prices of non-ferrous metals were up 17.9%, with prices for basic iron, steel, and ferro-alloys up 17.5%.

For other components,

  • Prices of durable consumer goods increased by a more modest 1.4% and capital goods by 0.9% compared with Mar-2020.
  • As a result of a 20.8% slide in prices for pork, food prices fell by 2.5% that dragged prices of non-durable consumer goods down by 1.4% year-on-year.

Market Impact

Ahead of the inflation figures, the EUR had fallen to a pre-stat low and current day low $1.20340 before rising to a pre-release high $1.20719.

In response to the stats, the EUR fell to a post-stat low $1.20483 before rising to a post-stat and current day high $1.20800.

At the time of writing, the EUR was up by 0.16% to $1.20578.

EURUSD 200421 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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