Producer prices in Germany during the month of July picked up slightly from June, but remained sharply below the previous year’s levels due to soft energy prices. However, it remained marginally above what markets had earlier expected.

German producer prices rose 0.2 percent in July after gains of 0.4 percent in May and June and the reading was marginally stronger than the 0.1 percent expected, data released by the Federal Statistical Office, or Destatis, showed Friday.

In annual terms, there was a decline of 2.0 percent compared with 2.2 percent previously and the lowest rate of decline since August 2014. The underlying index excluding energy registered a 0.2 percent monthly increase for a 0.5 percent annual decline from 0.7 percent previously, while there was volatility in food prices for the month.

Energy prices were unchanged over the month, while registering a 6.2 percent annual decline, while prices of intermediate goods declined fell by 1.8 percent over the year. The other categories all recorded annual increases with an annual increase of 1.2 percent for durable consumer goods and 0.5 percent for capital goods.

However, there will still remain some concerns over the risk of deflationary shocks emerging from global events, especially if Sterling continues to weaken and there is a renewed downturn in the Chinese economy, but the most likely outcome is that the annual rate will turn positive, which would tend to lessen pressure for further policy easing by the European Central Bank.