Post by account_disabled on Feb 28, 2024 6:01:38 GMT
The 6 percent drop in prices charged by companies for goods coming off the production line in the year to July is the fastest since 2009. It was driven mainly by sharp drops in wholesale energy prices, according to data from the federal statistics agency. Economists polled by Reuters had forecast a 5.1 percent drop. The 1.1 percent monthly drop was also larger than the 0.2 percent drop they forecast. Oliver Rakau, an economist at consultancy Oxford Economics, said the data “offers further support for our view that there should be significant progress on the disinflationary front in the remainder of 2023 as lower producer prices pass through, especially to the prices of consumer energy and basic goods. with a lower impact on basic services.” About 40 percent of German producer prices are now lower than the high levels reached last year. Energy producer prices fell 19.3 percent. Prices of intermediate goods, such as metals, wood and fertilizers, also fell year on year. But producer prices for food rose 9.2 percent, while prices for consumer durables, such as furniture and appliances, and capital goods, such as machinery, were also higher than a year ago.
The European Central Bank's governing council is looking for signs of whether its unprecedented rise in interest rates to a 22-year high has done enough to reduce consumer price inflation from its highest level in a Job Function Email Database Bgeneration to its 2 percent target. The first drop in German producer prices since October 2020 “would add weight to the ECB council's arguments favoring a pause or at least a skip at the September meeting as inflation concerns ease and strengthen. concerns about growth,” Rakau said. However, like many economists, he predicted that the ECB would continue to raise its benchmark deposit rate back to 4 percent at its next monetary policy meeting on September 14, "given the resistance to inflation of the labor market and services and salary dynamics.
Goldman Sachs said in a note to clients on Monday that it expected annual euro zone core inflation, which excludes volatile energy and food prices, to remain above 5% through September and only fall to 4% by end of the year. The high growth in prices for services partly offsets the fall in prices for goods. Eurozone wages have risen almost 5 percent annually, according to Eurostat, the EU's statistics office. This should help wage growth return to positive real terms this year as headline inflation continues to fall, giving a boost to consumer purchasing power along with government support that could keep pressures on prices. Piet Haines Christiansen, head of fixed income research at Danske Bank, said the fall in German producer prices was “an important prerequisite for bringing inflation more quickly in line with the target.” But he added: “If consumer activity remains decent, inflation will not fall as much and as fast as needed.
The European Central Bank's governing council is looking for signs of whether its unprecedented rise in interest rates to a 22-year high has done enough to reduce consumer price inflation from its highest level in a Job Function Email Database Bgeneration to its 2 percent target. The first drop in German producer prices since October 2020 “would add weight to the ECB council's arguments favoring a pause or at least a skip at the September meeting as inflation concerns ease and strengthen. concerns about growth,” Rakau said. However, like many economists, he predicted that the ECB would continue to raise its benchmark deposit rate back to 4 percent at its next monetary policy meeting on September 14, "given the resistance to inflation of the labor market and services and salary dynamics.
Goldman Sachs said in a note to clients on Monday that it expected annual euro zone core inflation, which excludes volatile energy and food prices, to remain above 5% through September and only fall to 4% by end of the year. The high growth in prices for services partly offsets the fall in prices for goods. Eurozone wages have risen almost 5 percent annually, according to Eurostat, the EU's statistics office. This should help wage growth return to positive real terms this year as headline inflation continues to fall, giving a boost to consumer purchasing power along with government support that could keep pressures on prices. Piet Haines Christiansen, head of fixed income research at Danske Bank, said the fall in German producer prices was “an important prerequisite for bringing inflation more quickly in line with the target.” But he added: “If consumer activity remains decent, inflation will not fall as much and as fast as needed.