German December Producer Prices Rise Most Since 1982 on Oil
Bloomberg.com: Germany
Jan. 19 (Bloomberg) -- Producer-price inflation in Germany, Europe's largest economy, rose the most in more than two decades in December after a surge in the price of oil.
Prices for goods from plastics to newsprint were 5.2 percent higher in December from a year earlier, the Federal Statistics Office in Wiesbaden said in a statement today. That was the biggest gain since July 1982. Economists expected a rate of 5.1 percent, the median of 28 estimates in a Bloomberg survey showed.
A 39 percent increase in the cost of crude in the past year has fueled inflation in the 12 euro nations, prompting the European Central Bank to raise interest rates last month. With unemployment at about twice the rate in the U.S., consumers in Germany are keeping a rein on spending, limiting the scope for a further acceleration in inflation.
``There isn't the need for hectic activity from the ECB,'' said Manfred Kurz, chief economist at Bayerische Landesbank in Munich. ``Inflation will stay around these levels.''
Consumer prices in Germany last year rose 2 percent, the most in four years, after the price of oil surged to a record of $70.85 per barrel in August. While the price of a barrel of oil declined to $55.40 in November, it's rebounded 17 percent since then and was worth $65.87 at 7:52 a.m. in Frankfurt.
Producer prices advanced 4.6 percent in 2005 from a year earlier, the statistics office said, also the most since 1982. From a month earlier, prices gained 0.3 percent in December.
The cost of oil-related products including gasoline jumped 14 percent in 2005 from a year earlier and the price of diesel fuel rose 13 percent, the statistics office said. The price of light heating oil surged 37 percent and liquid natural gas climbed 33 percent.
The ECB is concerned that higher oil prices will spur inflation as faster economic growth in Germany and across the euro region prompts workers to raise pay demands. Germany's IG Metall labor union, the country's second-largest, is demanding a 5 percent increase in wages.
President Jean-Claude Trichet said Jan. 13 the central bank needs to stay ``vigilant'' on inflation, which he expects to breach its 2 percent ceiling for a seventh year in 2006.
Investors are betting the ECB will raise its benchmark rate to 2.5 percent by the end of the first quarter and to 2.75 percent by the end of the third, futures trading shows. The implied rate on the three-month contract for March settlement was at 2.67 percent today, while the rate on the September contract was at 2.92 percent.
The contracts settle to the three-month euro area inter-bank offered rate for the euro, which has averaged 15 basis points more than the ECB's benchmark rate since the currency's launch in 1999.
Jan. 19 (Bloomberg) -- Producer-price inflation in Germany, Europe's largest economy, rose the most in more than two decades in December after a surge in the price of oil.
Prices for goods from plastics to newsprint were 5.2 percent higher in December from a year earlier, the Federal Statistics Office in Wiesbaden said in a statement today. That was the biggest gain since July 1982. Economists expected a rate of 5.1 percent, the median of 28 estimates in a Bloomberg survey showed.
A 39 percent increase in the cost of crude in the past year has fueled inflation in the 12 euro nations, prompting the European Central Bank to raise interest rates last month. With unemployment at about twice the rate in the U.S., consumers in Germany are keeping a rein on spending, limiting the scope for a further acceleration in inflation.
``There isn't the need for hectic activity from the ECB,'' said Manfred Kurz, chief economist at Bayerische Landesbank in Munich. ``Inflation will stay around these levels.''
Consumer prices in Germany last year rose 2 percent, the most in four years, after the price of oil surged to a record of $70.85 per barrel in August. While the price of a barrel of oil declined to $55.40 in November, it's rebounded 17 percent since then and was worth $65.87 at 7:52 a.m. in Frankfurt.
Producer prices advanced 4.6 percent in 2005 from a year earlier, the statistics office said, also the most since 1982. From a month earlier, prices gained 0.3 percent in December.
The cost of oil-related products including gasoline jumped 14 percent in 2005 from a year earlier and the price of diesel fuel rose 13 percent, the statistics office said. The price of light heating oil surged 37 percent and liquid natural gas climbed 33 percent.
The ECB is concerned that higher oil prices will spur inflation as faster economic growth in Germany and across the euro region prompts workers to raise pay demands. Germany's IG Metall labor union, the country's second-largest, is demanding a 5 percent increase in wages.
President Jean-Claude Trichet said Jan. 13 the central bank needs to stay ``vigilant'' on inflation, which he expects to breach its 2 percent ceiling for a seventh year in 2006.
Investors are betting the ECB will raise its benchmark rate to 2.5 percent by the end of the first quarter and to 2.75 percent by the end of the third, futures trading shows. The implied rate on the three-month contract for March settlement was at 2.67 percent today, while the rate on the September contract was at 2.92 percent.
The contracts settle to the three-month euro area inter-bank offered rate for the euro, which has averaged 15 basis points more than the ECB's benchmark rate since the currency's launch in 1999.
posted by Marcel at 3:35 AM
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