Sign Up Log in

    Germany’s Producer Price Index falls short of predictions with a -0.2% decline in December

    by VT Markets
    /
    Jan 20, 2026
    Germany’s Producer Price Index (PPI) for December fell by 0.2%. This decrease is worse than the expected drop of 0.1%. It shows that prices producers receive for their goods are declining. The report highlights economic factors that are influencing production prices at this time.

    Deflationary Pressures

    The larger-than-expected drop in German producer prices for December 2025 indicates that deflationary pressures are increasing in Europe’s largest economy. This aligns with recent data showing a 0.5% contraction in Eurozone industrial production for November. We interpret this as a potential sign that the European Central Bank may need to rethink its neutral position on interest rates sooner than anticipated. We suggest traders prepare for lower long-term interest rates, making German Bund futures a good investment. The German 10-year yield, which struggled to stay above 2.3% in the last quarter of 2025, might now approach the 2.1% mark. This situation favors strategies like buying EURIBOR futures contracts for later in 2026, anticipating possible rate cuts. This producer price data is negative for the Euro since it increases the gap in monetary policy with the U.S. Federal Reserve, which has indicated it will maintain its current stance. We predict that the EUR/USD exchange rate, which averaged 1.0850 in the fourth quarter of 2025, may face selling pressure. Options traders should think about buying puts on the EUR/USD or setting up other bearish strategies to hedge or speculate on a drop toward 1.0600.

    Impact on Equity Markets

    Falling input costs could actually support equity markets by improving corporate profit margins and increasing the chances of cheaper borrowing. We are looking into call options on the DAX 40 index, which has stayed within a range for weeks. This situation is similar to what happened in late 2023 when weak economic data was seen as a positive sign of future central bank support. Create your live VT Markets account and start trading now.

    here to set up a live account on VT Markets now

    In This Article

    see more

    Back To Top
    server
    Click Click Click Click Click
    Follow us on

    Hello there 👋

    How can I help you?

    Chat with our team instantly

    Live Chat

    Start a live conversation through...

    • Telegram
      hold On hold
    • Coming Soon...

    Hello there 👋

    How can I help you?

    telegram

    Scan the QR code with your smartphone to start a chat with us, or click here.

    Don’t have the Telegram App or Desktop installed? Use Web Telegram instead.

    QR code