The German Producer Price Index (PPI) rose a surprising 0.7% this past month, beating out expectations for a meager 0.2% increase, up from last month’s 0.1% growth. The PPI report measures the percent change in the price of goods sold by manufacturers, indicating both growth in demand and rising material costs.
Inflationary reports like the monthly PPI figure highlight levels of price increases across a nation’s economy. Price increases reflect several influences in both positive and negative directions, but tend to bolster confidence as they are a sign of growth. Price decreases, known as deflation, are more worrisome for the cyclical trap they tend to generate on regional growth. With today’s significant uptick in Germany’s PPI, the EUR may find some added confidence injected prior to the week’s closing.
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