German Producer Prices Rise At Fastest Pace in More Than Two-Years
The Federal Statistics Office reported today that German producer prices increased the most since October 2008 surging 5.7% in January from a year earlier, prices rose 5.3% in December. The jump in prices was mainly propelled by energy costs the report showed with the price of crude oil having risen 9% in the past year.
As consumers increase their spending amid falling unemployment companies have more flexibility in passing on some costs to consumers. ECB President Trichet said earlier this month that inflation risks “could move to the upside” on the expectation of rising consumer prices which have been passed on by companies.
The euro had a muted reaction to the release as traders focused on geopolitical concerns in the Middle East after Iran formally requested permission from Egypt for two warships to pass through the Suez canal while others remained sidelined ahead of the day’s key release in the form of UK retail sales at 09:30GMT. If the euro can hold onto gains registered on Wednesday and Thursday then it will manage its first weekly gain in the last four weeks alleviating some downside pressure.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.