German factory gate inflation plunges to 1.2%

Friday, 19. July 2019 08:01

Signs of weakening in manufacturing in the Eurozone's largest exporter spread to producer prices, where the Federal Statistical Office in Wiesbaden measured a fall of 0.4% for June compared to the previous month's 0.1% decline. Germany's year-on-year rate came in at 1.2% or 0.7 percentage points down from May. The inflation measure's reading is the lowest since December 2016 as policymakers from the European Central Bank are preparing to reintroduce stimulus and most probably cut borrowing costs.

The biggest downward contribution to the main index in the reporting month alone came from energy. The item lost 1.4%. As it gained 2.2% on an annual basis, factory gate prices were only 0.9% higher on the year if the component isn't factored in, and unchanged from May. Electricity prices rose 7.4% over the previous 12 months. Analysts will be focusing on data from the industry for insight as recession fears rise.

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