German Producer Prices Dip in June as Energy Costs Fall
Germany's PPI fell 0.3% month-on-month in June, pulled down by a sharp drop in energy prices, even as underlying cost pressures broadened.
German producer prices slipped 0.3% in June compared to May, exceeding the 0.2% decline analysts had forecast, as a steep drop in energy costs masked mounting price pressures elsewhere in the economy, official data showed. The result reversed a 0.3% gain recorded in the prior month.
Energy prices drove the monthly decline, tumbling 1.8% in June, with petroleum products alone cratering 7.4% month-on-month. Strip out energy entirely, however, and producer prices actually rose 0.2% compared to May, signaling that the cooling at the headline level does not tell the full story of what German manufacturers are experiencing.
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On an annual basis, the picture looks more inflationary. Producer prices climbed 1.8% compared to June of last year, supported in part by a 0.4% year-on-year increase in energy costs. More notably, intermediate goods prices surged 5.1% versus the same month last year, with metals jumping 11.8% and basic chemicals soaring 12.9% annually — figures that reflect supply-chain stress and commodity market volatility.
Within the monthly breakdown, intermediate goods rose 0.7% and capital goods edged up 0.2%, while consumer goods prices were largely flat against May. The divergence between falling energy prices and rising upstream costs points to a broadening of inflation across the German industrial base, a trend analysts tie in part to the ongoing conflict in the Middle East continuing to roil global commodity markets.
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