Producer prices rose a smaller than expected 0.2 percent on the month in February. This was their fifth straight gain and, combined with positive base effects, enough to lift the annual PPI inflation rate from January's 2.4 percent to 3.1 percent, its highest mark since December 2011.
On a monthly basis, intermediates were up 0.6 percent and capital goods 0.1 percent. However, consumer goods were only flat and energy was down 0.2 percent. Excluding energy, prices advanced 0.3 percent to stand 2.2 percent above their level a year ago. This was 0.4 percentage points more than the yearly rate posted in January.
The February data mean that annual PPI inflation has risen some 5.1 percentage points over the last year. More significantly, the underlying rate has climbed nearly 3 percentage points. The acceleration in both measures suggests that capacity pressures in German manufacturing industry are becoming increasingly significant and, domestic demand permitting, this should feed into a higher rate of CPI inflation in due course.