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German PPI Sinks to Lowest Level Since 2004

AP
Friday, 17 Aug 2007 | 3:12 AM ET

German producer price inflation dropped last month to its lowest level since early 2004, pushed down by falling energy prices, according to government figures released Friday.

Producer prices, a measure of price pressures at the factory gate seen as an important gauge of inflation before it reaches consumers, were up 1.1% from July 2006.

That was the lowest reading since April 2004, when the annual inflation rate stood at 0.9%, the Federal Statistics Office said. Producer prices slipped by 0.1% compared with the previous month.

The year-on-year rate was short of the 1.4% forecast of analysts surveyed by Dow Jones Newswires. It compared with a rate of 1.7% in June and 3.2% as recently as January.

Energy prices were down 2.8% on the year in July, while prices of oil products were 2.6 % lower.

Inflation data from Germany, Europe's biggest economy, are important to interest rate decisions by the European Central Bank.

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