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Decline in Producer Inflation in Germany and Poland

ECONOMYDecline in Producer Inflation in Germany and Poland

Producer price inflation (PPI) in Germany turned out to be much larger than the market expected. Producers’ prices fell by 1.20 percent m/m (forecast -0.50 percent), and 8.60 percent y/y (forecast -8.00 percent). This clearly shows a slowdown in the German economy and price deflation among producers.

On one hand, lower PPI readings will undoubtedly translate into a further decrease in consumer price inflation CPI. Global deflationary factors continue to remain “in action”. On the other hand, a slowdown in Europe’s largest economy certainly causes some concern, especially for Poland, for which Germany is one of the main trading partners.

Producer inflation in Poland also turned out to be higher than market expectations today. Producers’ prices fell by 6.40 percent compared to forecasts at -5.70 percent. In the case of Polish PPI, its decrease is certainly helped by a strong PLN and energy price reductions. Again, the decrease in PPI, which will translate into CPI, is pleasing. The potential slowdown is worrisome.

Szymon Gil, Broker Michael / Ström Brokerage House

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