German producer prices jump 3.7 percent in July

19th August 2010, Comments 0 comments

German producer prices, the cost of goods at the factory gate, rose by more than expected in July, official data showed on Thursday, although the core rate remained modest when energy costs were stripped out.

Producer prices gained 0.5 percent from June and jumped 3.7 percent from July 2009, according to the national statistics office Destatis.

Analysts polled by Dow Jones Newswires had forecast increases of 0.1 percent and 3.3 percent, respectively, for Europe's biggest economy.

The annualised figure marked a sharp increase from the two previous months, after gains of 0.9 percent in May and 1.7 percent in June, Destatis said.

On August 10, the office revised its figure for overall German inflation in July up to 1.2 percent, matching the high for the year posted in May.

A breakdown of the latest figures showed energy costs were again the main factor behind the producer price increases and when they were stripped out, prices were 2.4 percent higher on the year and 0.1 percent higher on the month.

Intermediate goods, those used to produce final products, posted a sharp annualised gain of 5.5 percent however, their biggest jump since March 2007.

Barclays Capital economist Fabio Fois said "we tend to focus on the core consumer goods PPI."

He forecast a brief spike in food prices but said pressure on headline inflation is "likely to remain contained for a while."

© 2010 AFP

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