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Producer prices in Germany rose by 0.4% in June 2016

Producer prices in Germany rose by 0.4% MoM in June 2016, according to the federal statistics office Destatis. The growth is the same as the previous month report. However, compared to April, when prices accelerated seriously. However, producer price inflation declined on an annual basis by 2.2%. Further, the short-run trend will hold importance given the fresh deflationary impetus from Sterling’s decline and any fresh declines would risk fresh downward pressure on consumer prices. This shows that Germany is probably recovering from the pressures of deflation. However, there will be fresh concerns over another round of deflationary pressures following the latest EUR/GBP course fluctuations.

Producer prices of energy products decreased by 6.5% on a monthly basis, while those of intermediate goods – by 2%. The non-durable consumer goods dropped by 0.2%. Capital goods and durable consumer goods, however, rose respectively by 0.6% and 1.3%. There were monthly increases across all sectors as underlying downward pressure continued to ease.

The base index, which excludes energy decreased by 0.7% yoy and increased by 0.2% on a monthly basis.

The Eurozone as a whole managed to climb out of deflation for the first time in four months as of June, welcome news for monetary policymakers who are due to make their latest decision on stimulus measures tomorrow.

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