Despite expectations of a more moderate price decline, producer prices in Germany fell by 8.6 percent in December. A positive development.
In Germany, prices at manufacturer level fell again sharply at the end of last year. In December, producer prices fell by 8.6 percent year-on-year, as the Federal Statistical Office in Wiesbaden announced.
The decline was slightly stronger than in November, when prices fell by 7.9 percent, but significantly weaker than in October and September. Analysts had on average expected prices to fall by eight percent in December.
In 2023 as a whole, producer prices were 2.4 percent lower than a year earlier, it said. A statistical base effect continues to cause prices to fall. In 2022, the prices that manufacturers receive for their goods rose at a record rate of 45.8 percent. The main reason was Russia’s war against Ukraine, which made energy and many raw materials so expensive. However, prices have now fallen again, which is also depressing inflation at the company level.
Declines in energy prices
The decline in producer prices in December was once again due to the decline in the price of energy, but intermediate goods were also cheaper year-on-year. According to the information, energy was 23.5 percent cheaper than a year before. In a month-on-month comparison, energy prices fell by 3.7 percent. The decline in electricity prices had the greatest impact on the rate of change compared to the same month last year for energy.
Producer prices capture price pressure at the manufacturer level by reflecting the producers’ sales prices. The development also tends to have an impact on consumer prices, which the European Central Bank (ECB) bases its monetary policy on. Because of high inflation, the ECB has raised its key interest rates significantly, but has not changed them in recent months.
Source: Stern
