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Economy in Brief

German PPI Drops But Still Has Lots of Upward Momentum
by Robert Brusca September 19, 2008

The upward pressure on the PPI abated for one month but the longer term momentum is still very clear. The PPI headline fell by a harp 0.5% but that index is still up by 8.1% year-over-year and at a faster pace over three months and six months. The Core PPI is up by 0.2% in the month and by 3.4% year-over-year but even that is still accelerating from 12 months to 6 months to 3 months.

The accompanying chart shows the year-over-year trends by PPI sector. Capital goods inflation is still on the rise and that one is an energy price free sector. Consumer goods inflation peaked months ago and intermediate goods inflation is just being blunted now. Germany is one of the low inflation euro economies. This is not a good picture if it is from one of the best performers.

Germany PPI
  %m/m %-SAAR
  Aug-08 Jul-08 Jun-08 3-mo 6-mo 12-mo 12-moY-Ago IN Q3
MFG -0.5% 2.0% 1.0% 10.2% 10.4% 8.1% 1.0% 7.1%
Ex Energy 0.2% 0.8% 0.4% 5.4% 4.5% 3.4% 2.7% 5.0%
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