Euro zone economic data released Tuesday showed producer price inflation rose sharply in August, mainly due to higher oil prices.
The annual rate for producer price inflation, however, remained steady at 0.6%.
Forecast-busting German producer price inflation further cemented market expectations that the European Central Bank would not be cutting interest rates any time soon.
U.S. gold futures were steady to marginally higher early Tuesday as the market awaited government reports on retail sales and producer price inflation.
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As recently as July 2008, the U.S. Fed (with the help of commercial banks) had produced YOY Consumer Price Inflation of 5.5% and Producer Price Inflation of 9.8%.
The 10-year German benchmark was pressured lower to 2.42% after an EU report from the Luxembourg statistical office showed a slowdown in producer price inflation to an annual pace of 5.9% in June.
Investors had been worried that the economy was going to start experiencing deflation--a prolonged bout of falling prices--but the slight increase, paired with Thursday's higher than expected reading on producer price inflation, calms those worries for now.
Italian producer-price inflation slowed to 1.4% in the year to July the slowest since September 1999.
The euro area as a whole brought better tidings: in March unemployment fell slightly, to 8.4%, and annual producer-price inflation slowed to 4.1%.
Producer-price inflation slowed to 1.5% in the year to July from 2.5% in June, led by the largest monthly drop in energy prices in 12 years.
It was reported this morning that the Producer Price Index, measuring inflation at the producer level, rose 0.8% in November, its biggest gain since March.
And from the government: the Labor Department's Producer Price Index (inflation), the Commerce Department's new housing starts report and the Fed's Beige Book -- its summary of economic conditions region by region.
The March producer price index showed wholesale inflation was lower than expected, with the overall index down 0.6% in March versus 0.3% expected, as energy costs fell.
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On top of this, recent U.S. inflation data from the producer and consumer price indexes show that both wholesale and consumer inflation was less than expected.
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The Labor Department also reported the producer price index, which measures inflation at the wholesale level, climbed 0.3% in April after dropping 1.2% in March.
The producer price index, which measure wholesale inflation, has sagged over the past few months.
Further, the producer price and consumer price indexes, both inflation gauges, are set for release Tuesday and Wednesday, respectively.
Wholesale-level inflation, via the Producer Price Index, is running in the 4 to 6 percent range in most developed economies.
That news, coupled with a slightly hotter inflation reading--the Producer Price Index rose 1.4% in January, above the anticipated 0.8%--weighed on shares as the Street got a soft open.
Also surprising this week was a higher reading for U.S. wholesale inflation, with the overall producer price index rising 0.8% in September, above the 0.4% expected and the flat reading in August.
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Economists had been expecting the Producer Price Index to climb 0.7% and for core inflation to rise by 0.1%.
Inflation bounced up again in July, with the Producer Price Index (PPI) jumping 0.2% after having declined 0.4% in June.
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For next week, the inflation story will return as the U.S. producer and consumer price index reports will be released and that could underpin gold, too, he said.
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Libby Bierman, Sageworks analystThe improved profitability is impressive, considering modest inflation at the producer level in recent years, as measured by the Producer Price Index.
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