German Producer Prices Rise 1.8% in June for Third Straight Month

Germany's producer prices climbed 1.8 percent year-on-year in June, according to data released on July 20 by the federal statistics office, Destatis, marking a third consecutive month of factory-gate inflation but a slowdown from May's 2.2 percent pace and a figure slightly below market forecasts. The main upward pressure came from intermediate goods, which jumped about 5.1 percent as costs surged for metals including copper, pig iron, steel and ferroalloys. Capital goods prices rose around 2.1 percent, while durable consumer goods, such as machinery, furniture and household appliances, increased about 1.8 percent. Energy prices edged only 0.4 percent higher, as gains in petroleum products, heating oil and motor fuels were partly offset by cheaper natural gas and electricity, tempering the impact of geopolitical tensions in the Middle East. Non-durable consumer goods, by contrast, fell about 2.2 percent, driven largely by lower food prices, notably butter and pork. Producer prices are watched closely as an early indicator of where consumer inflation may head, since manufacturers often pass changes in their costs on to buyers. The mixed picture, with rising industrial-input costs but softer energy and food, adds nuance to the outlook for eurozone inflation and European Central Bank policy.