Producer prices were on the strong side of expectations in April. A 0.4 percent monthly increase was the sixth rise in the last seven months and lifted annual PPI inflation from 3.1 percent to 3.4 percent, its highest mark since December 2011.
Leading the boost to overall prices was the consumer sector which saw a sizeable 0.5 percent monthly advance. However, energy and intermediates, both up 0.4 percent, were not far behind. Capital goods edged just 0.1 percent higher. Excluding energy, the PPI rose 0.3 percent versus March and, at 2.8 percent, its annual rate was up 0.2 percentage points from last time.
The April data suggest that pipeline inflation pressures in German industry are beginning to intensify. In particular, the annual underlying PPI rate has climbed almost 4 percentage points over the last twelve months. Business surveys continue to highlight producers struggling with a lack of spare capacity and it would seem that this is now taking an increasing toll on factory gate prices. Stronger economic growth should see this translate into faster CPI inflation further down the road.