-Howard Archer, IHS Global.
Factory prices in the Euro zone's number one economy rose modestly in March from February, but dropped for the 20th consecutive month, when measured on an annual basis. The PPI is considered as a proxy of consumer price inflation, as manufacturers pass on their cost increases or savings to their ultimate customers. The headline annual Producer Price Index slid 1.7% in March in a sign the European Central Bank's aggressive asset purchases have not yet inspired confidence in German manufacturers to raise wholesale prices. Analysts, however, had expected a 1.6% decline. On a monthly basis the gauge rose 0.1% in March, after climbing 0.1% in the previous month, while economists had called for a 0.2% increase. Energy prices continued to influence producer prices in March. They remained unchanged from the previous month, but declined 4.7% from March 2014. Excluding energy prices, which can be volatile, producer prices rose 0.1% on the month and decreased 0.5% on the year in March.
Last week, the data showed German consumer prices accelerated growth on an annual basis in March, a sign the danger of Germany falling into a precarious deflationary spiral seemed no longer imminent. Inflation in the Euro zone's largest economy climbed 0.3% year-on-year during in the reported month, following the 0.1% uptick seen in February.
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