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    Germanys Producer Price Index Points to a Further Pickup in Inflation

    Abstract: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.

      Its 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, Germanys producer price index rose by 0.9% month-on-month, following a 0.7% rise in February. Economists had forecast a 0.6% increase.

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      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.

      [fx-article-ad]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.

      [fx-image src=/2021/04/EURUSD-200421-Hourly-Chart.png data-zoom-target=https://responsive.fxempire.com/cdn/n/n/_fxempire_/2021/04/EURUSD-200421-Hourly-Chart.png originalWidth=1794 ratio=2.08]

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