German Wholesale Prices Were Down 0.7% Year-on-Year in May

The German economy was in focus early in the Thursday (June 13) European session.

German Wholesale Prices Advance in May

German wholesale prices declined 0.7% year-on-year in May after a fall of 1.8% in April. Economists forecast wholesale prices to decrease by 0.6%.

Furthermore, wholesale prices rose by 0.1% month-on-month in May after rising by 0.4% in April. Economists expected wholesale prices to advance by 0.3%.

According to Destatis,

• Wholesale prices for chemical products declined 13.9% year-on-year, impacting the headline numbers. Month-on-month, chemical product prices fell by 0.9%.
• Prices in the wholesale trade of iron, steel, and semi-finished iron/steel products were down 12.1% year-on-year. Prices fell by 0.5% month-on-month in May.

There were also falls in wholesale trade prices for:

• Grain, unmanufactured tobacco, seeds, and animal feeds (-5.1%).
• Milk, milk products, eggs, edible oils, and dietary fats (-5.1%).

However, there were year-on-year price increases for:

• Non-ferrous ores, non-ferrous metals, and semi-finished products (+9.7).
• Coffee, tea, cocoa, and spices (8.2%).
• Sugar, confectionary, and baked goods (+7.2%).
• Fruit, vegetables, and potatoes (+6.4%).
• Tobacco products (+5.4%).
• Grain, raw tobacco, seeds, and animal feed (+3.4%).

ECB Rate Path Impact Analysis

The less pronounced year-on-year decline in wholesale prices signaled an improving demand environment, aligning with hopes of an improving macroeconomic environment.

Moreover, wholesale prices are a leading indicator of consumer price inflation. Upward trends in wholesale prices could signal a pickup in demand-driven inflationary pressures. The ECB could delay the timing of its next interest rate cut if headline inflation accelerates further.

EUR/USD Moves on German Wholesale Prices

Before the German wholesale price numbers, the EUR/USD climbed to a high of $1.08158 before falling to a low of $1.08004.

However, in response to the wholesale price data, the EUR/USD fell to a low of $1.08034 before rising to a high of $1.08070.

On Thursday, the EUR/USD was down 0.02% to $1.08067.

Up Next

Industrial production figures for the Eurozone will draw investor attention before the US session. Economists forecast industrial production to rise by 0.2% in April after increasing by 0.6% in March.

Additionally, US producer prices and initial jobless claims figures will attract investor attention in the US session.

Economists forecast producer prices to rise by 0.1% in May after increasing by 0.5% in April. Furthermore, economists expect core producer prices to advance by 0.3% after rising by 0.5% in April.

Hotter-than-expected producer prices could affect investor bets on a September Fed rate cut after the FOMC Economic Projections.

Furthermore, an unexpected fall in US initial jobless claims may also influence the Fed interest rate trajectory. Economists expect initial jobless claims to increase from 225k to 229k in the week ending June 8.