First Signs of PPI Easing Since 2020

GERMANY JUN PPI +0.6% M/M, +32.7% Y/Y (FCST 33.7%), MAY +33.6% Y/Y

• German factory gate inflation softened 0.9pp to +32.7% y/y, coming off the May record high.
• This is the first sign of German producer prices easing since March 2020, when PPI was back in negative territory.
• Energy prices continue to account for the bulk of PPI, rising by 86.1% y/y in June. This is however 1.0pp lower than in May.
• Notable increases were seen in intermediate goods (+22.3% y/y), capital goods (+7.4% y/y) and durable and non-durable consumer goods (+10.5% y/y and +14.7% y/y).
• Intermediate goods previously largely imported from Russia and Ukraine continue to see high prices, with fertilisers over doubling and flour up by close to 50%.
• The 7.4% increase in capital goods' costs was the highest since 1975, as machinery and automotive prices continue to climb.
• Core PPI was recorded at +15.5% y/y, down 1.0pp from May, implying that factory-gate inflation in Germany is beyond the peak.
• The data comes the same day UK input producer prices for June were reported at 24.0%, the highest on record.