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Economy in Brief

EMU PPI Barely Gains in April But Year-on-Year Rate Rises to 4.3% from 3.9%
by Robert Brusca  June 2, 2017

The overall PPI (PPI excluding construction) rose by 0.1% in April after falling by 0.4% in March. The year-on-year pace is up to 4.3%, but the three-month change shows a 0.6% decline at an annualized rate. This unwinds the acceleration from a 4.8% pace over six months.

Oil is mostly responsible for whatever liftoff pattern is in the pipeline. Capital goods prices rose by 0.1% in April and are up at a rate of less than 1% (annualized) over three months, six months and 12 months. Consumer goods prices at the producer level rose 0.3% in April and are cruising at a 2.3% to 2.6% pave over three months, six months and 12 months. Intermediate prices went dead flat in April but are rising at 4.8% annual rate over three months, 6.3% pace over six months and 4% over 12 months.

At the country level, the PPI is falling in April in 4 of 11 of the EU/EMU members in the table. This is after prices fell on the month in seven countries in March when German inflation came in dead flat. As a result of these trends, inflation across these countries is falling in seven of them.

Across Europe, the fastest inflation is at 8.1% in the U.K., boosted by weak sterling, 7.2% in Sweden and 5.9% in Spain. The lowest year-on-year inflation is 3.2% in Germany, 3.2% in France, and 3.3% in Denmark.

On the day's trading, oil prices slipped below $50 per barrel. With oil still sputtering, the force behind the rise of the PPI is losing steam. The slippage in the PPI should set the stage for a softer PPI going ahead.

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