The Wholesale Prices in Germany experienced a decrease of 2.8% in July.

German wholesale prices fell today, which is discouraging for investors who were hoping for indications of an increase in demand. This downward trend suggests a negative outlook for the German economy.

Highlights

• Inflation remained a significant topic of interest today, with particular attention on the German wholesale inflation figures.
• The German wholesale price index recorded a 2.8% year-over-year decrease in July, compared to a 2.9% decline in June.
• Later today, investors should keep an eye on news updates to stay informed about any discussions or statements from central banks that might impact the market.

Today was a notable day on the European economic calendar, with a focus on German wholesale inflation figures. The continuous impact of weak demand on output prices has raised concerns about a potential severe economic recession in Germany, influenced by the European Central Bank (ECB).

Unfortunately, the German wholesale inflation figures did not provide much reassurance. In July, the German wholesale price index experienced a year-over-year decline of 2.8%, slightly higher than the anticipated 2.6% decrease. This decline follows a 2.9% decrease in wholesale prices observed in June.

According to Destatis, the statistical office of Germany:

Wholesale prices of mineral oil products witnessed a significant decline of 20.8% compared to the previous year.

There were also substantial declines in wholesale prices for waste and scrap (-32.8%), grain, unmanufactured tobacco, seeds, and animal seeds (-21.4%), metals and ores (-18.3%), and chemical products (-16.5%).

However, prices for fruit and vegetables saw an increase of 27.5%.

Wholesale prices for live animals also experienced a rise of 27.7%.

Although the wholesale price index only fell by 0.2% in July compared to the previous month, the report indicates a continued weak demand environment.

EUR/USD Reaction to German Wholesale Inflation

The EUR/USD currency pair experienced a mixed reaction to the German wholesale inflation data. Before the release of the numbers, the pair initially rose to a high of $1.09543 but then declined to a pre-stat low of $1.09293. After the announcement, the EUR/USD dropped further from $1.09373 to a post-stat low of $1.09270. As of this morning, the pair was down by 0.15% and trading at $1.09304.

Next Up

In the absence of significant euro area economic indicators, attention will turn to central banks and Beijing for any stimulus-related developments. Positive stimulus talk from Beijing could boost riskier assets, while central bankers will need to navigate cautiously amid the current risk-off sentiment.

It's noteworthy that there are no scheduled speeches from ECB or FOMC members today, so market chatter, particularly with the media, may influence sentiment.

Later in the day, the US consumer inflation expectation numbers could have a more substantial impact than usual. Investors will be keen to analyze these figures for insights into future inflation trends.