- Stephan Kohns, Bundesbank Deputy
German producer prices grew faster than expected last month, official data revealed on Friday. According to the German Federal Statistics Office (Destatis), the Producer Price Index (PPI) rose 0.2% month-over-month a non-seasonally adjusted basis in July, compared to the 0.4% hike see in the previous month, whereas market analysts anticipated the indicator to come in at 0.1% in the reported month. On an annual basis, producer prices dropped 2.0% in the seventh month of the year, following June's 2.2% fall, while economic desks expected the PPI to fall 2.1% year-over-year in July. In the meantime, energy prices fell 6.2%, whereas durable consumer goods jumped 1.2% and intermediate consumer goods slipped 1.8% in the same month. The data provided evidence that the Euro zone's largest economy recovered slightly from the deflationary pressure. Nevertheless, analysts remain cautions, arguing that there is a strong deflationary pressure coming from the latest sharp increase in the value of the Euro against the British Pound, driven by Britain's decision to leave the European Union.
In contrast with the Consumer Price Index (CPI), the PPI measures prices changes at the manufacturing and wholesale level and looks at three areas of production: industry-based, commodity-based and commodity-based final demand-intermediate demand.
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