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Economy in Brief

German PPI Points To Lower Inflation Ahead
by Robert Brusca January 21, 2009

Germany’s PPI for manufactured goods fell by 0.8% in December and is falling at an accelerated rate along with its ex-energy measure. In the fourth quarter MFG producer prices fell at a 4% pace compared to ex–energy prices that fell at a 3.2% pace. Price weakness is broad-based. The chart above highlights the ongoing weakness in consumer and intermediate goods prices. Capital goods prices are not yet showing much in the way of decline. But in orders data, capital goods orders are declining and orders are falling on a broad front. Prices may be more resilient for capital goods but that is not a sign of economic health. It may be a sign of the longer lags in producing capital goods. As such the price weakness may not show up for several months more.

Germany PPI
  %m/m %-SAAR  
  Dec-08 Nov-08 Oct-08 3-mo 6-mo 12-mo 12-moY-Ago IN Q4
MFG -0.8% -1.0% -0.2% -7.8% 0.0% 4.4% 2.4% -4.0%
 Ex Energy -0.4% -0.6% -0.3% -5.4% -0.7% 1.5% 2.2% -3.2%
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