Euro Reaction Muted as German Producer Prices Climb Unexpectedly
THE TAKEAWAY: German producer prices rose more than expected in March -> Economic growth remains primary concern in Germany, but inflation fears are on the rise -> Immediate Euro reaction muted
German producer prices came in above expectations for the month of March, the German stats bureau revealed today. Producer prices climbed 0.6% on the month versus the expected and previous 0.4%. The gauge registered a 3.3% gain from March 2011, more than the expected 3.1% and previous yearly number of 3.2%.
Despite (or perhaps because of) a policy emphasis on growth stimulus, inflation fears have seeped to the surface in Germany as property prices rise and monetary policy remains loose. Rising inflation in Germany could have widespread implications for the rest of the Eurozone given Germany’s size and influence in the 17-nation bloc.
Central bankers around Europe have recently stepped up inflation warnings as the region struggles to balance economic growth and price increase. The most recent Bank of England Minutes were the boldest perhaps, with MPC member Tucker describing recent news on inflation as “bad.” Upside CPI risks come from oil and commodity price increases.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.