German factory gate inflation subdued outside of energy in August

German factory gate prices edged past forecasts last month amid broad-based gains, led by energy cost pressures.

Producer prices in the euro area's largest economy increased by 0.2% on the month for a 2.6% year-on-year rate of advance, according to the Ministry of Finance.

Economists had penciled in a rise of 0.1% against August and of 2.5% on a year ago.

By categories, and in annualised terms, prices of electricity were ahead by 5.8% and those of petroleum products by 5.1%.

Prices of capital goods and durable consumer goods saw the smallest increase, with both up by 1.0%.

Natural gas distribution prices were the only major category sporting a fall, retreating by 6.4% in comparison to August 2016.

Excluding energy costs, producer prices were ahead by 0.1% on the month and 2.6% on the year, versus a 2.5% rate of advance in July. Yet here again, that was primarily the result of higher inflation from basic goods, which have a large energy input, pointed out Claus Vistesen, chief Eurozone economist with Pantheon Macroeconomics.

"Consumer and capital goods inflation was virtually unchanged, so it is fair to say that "core" producer price inflation pressures were stable last month.

"[...] the Commission's survey of manufacturers' selling prices suggest downside risks. The jump in the euro also suggests downside risks to import prices of manufacturing goods. By contrast, the Chinese PPI, which is a good lead on these data, has been resilient."