German July producer prices boosted by energy

Higher electricity and oil costs pushed producer prices in Germany, Europe's largest economy, up by slightly more than expected in July, official data showed on Thursday. Prices at factory gates rose by 0.5 percent month-on-month, the Federal Statistics Office said.
On the year, prices rose by 4.6 percent, the same rate as in June and April and equalling the highest rate of annual producer price inflation since April 2001.The mid-range forecast of economists polled by Reuters last week was for prices to rise by 0.4 percent month-on-month and by 4.4 percent from July 2004.
"The persistent rise in energy costs was responsible for the further significant gain in producer prices," the Office said in a statement. Energy costs jumped by 2.9 percent from the previous month and by 16.4 percent from July 2004.
A breakdown of the data showed that electricity costs had risen by 4.4 percent on the month and by 11.5 percent on the year in July. Prices of mineral oil products increased by 2.4 percent from June and by 16.9 percent from July 2004.
US oil prices hit a record $62 per barrel in early July after rising steadily throughout most of June. Last week they spiked to a new record of $67.10 but have since cooled to just above $63.
Doubts that producers can pump enough crude to satisfy global demand have lifted prices more than 50 percent this year towards the $82 inflation-adjusted average in 1980.
"The surge in oil prices is once again affecting headline inflation measures in Germany," Lehman Brothers economist Giada Giani said in a research note. However, Giani noted that core producer prices inflation had softened further. Excluding energy, prices rose by 1.4 percent compared with July 2004, slower than June's ex-energy annual gain of 2.0 percent, the Statistics Office said.
"The gap between headline and core producer prices inflation has reached the historical high of 3.2 percentage points, which is giving further support to the idea that the pass-through from higher energy costs into the rest of the production chain prices remains very limited," Giani said.