- Andrew Bosomworth, a senior portfolio manager at Pimco
German producer prices declined more than expected in July as energy prices continued to push the index down, indicating further downside risks to the cost of living outlook. The PPI index dropped by 0.1% on month and 0.8% on an annual basis in July, against expectations for a flat reading and a 0.7% decrease on monthly and yearly basis, respectively. Energy prices were down by 0.6% from the previous month and 3.2% compared to the last year. Price pressures in the Euro zone remain at dangerously low levels, forcing some experts calling for more actions from the European Central Bank. The most recent inflation data has showed consumer price inflation in the Euro bloc at 0.4% in annual terms, compared with the ECB's target of just below 2%.
Meanwhile, French President Francois Hollande revealed on Wednesday his plans to accelerate reforms to fuel growth, including increased home construction and tax breaks to poorer households in an attempt to win back voter confidence. Housing has become a major issue for the Hollande government, with housing starts in France at a 16-year low hurting the French economy. The proposed measures would tackle taxation as well as regulatory and financing issues for construction. Hollande also urged the European Union and ECB to boost more economic growth through investments and weakening still strong Euro.
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