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Friday, April 18, 2008

Producer Price Inflation March 2008

German producer-price inflation, an early indicator of price pressures in the economy, accelerated to the fastest pace in 15 months in March on higher energy costs. Prices for goods from newsprint to plastics increased 4.2 percent from the same month a year earlier, the most since December 2006, after rising 3.8 percent in February, the Federal Statistics Office in Wiesbaden said today. From February, prices advanced 0.7 percent.

The euro gained after the inflation report, which may reinforce investor expectations that the European Central Bank will keep the benchmark interest rate at a six-year high of 4 percent even as counterparts cut borrowing costs. Evidence that companies are raising prices and wages has raised concern among ECB policy makers about an inflation spiral.

Mineral oil products rose 20.5 percent in the year and 4 percent from February, the statistics office said. Excluding energy costs, producer prices rose 2.8 percent from March 2007.

The price of oil has surged 82 percent in the past year and reached a record $115.54 a barrel yesterday. German inflation was at 3.3 percent in March, above the ECB's limit for a 13th month. The ECB seeks to keep inflation just below 2 percent.

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